Property Letting - Sale & Taper Relief?

Hi,

Myself and a friend purchased a property on 3/5/00, and completed a sale on 21/5/04. It was let for the whole period, and neither of us ever lived in it.

Purchase Price £38,500 Expenses £3707.25 Selling Price £95,000

Total Capital Gain £52,795.75

Half of Capital Gain £26,396.37

Chargeable Gain @ 90% after 4 years £23,756.73

Individual Allowance 2004-2005 £8,200

Gain added to Income £15556.73

Charged @ 20% Tax Due £3111.35

Charged @ 40% Tax Due £6222.69

Is this correct? Are there any other allowances that could be applied?

I am assuming that lettings relief is only available if the property has been a PPR?

My accountant will be dealing with my return, but forewarned is forearmed

Reply to
Richard Faulkner
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£52,792.75

It wasn't furnished holiday accommodation?

Your capital gains will be taxed dependent on your other income. You have given no indication of other income so the tax can't be calculated with the information provided.

Yes. But letting may effect your taper relief calculation.

True. Can't your accountant forewarn you?

Reply to
Peter Saxton

In message , Peter Saxton writes

Whoops

No

AFAIK it will be taxed at either 10%, 20% or 40% - for me it will likely all be 20%, and for my friend 40%.

The property was let from the day we bought it to 7/4/05.

Of course he could, but it's nice to know that I know how he arrives at the figures.

Many Thanks.

Reply to
Richard Faulkner

"Richard Faulkner" wrote

Richard, the buyer continued to let it after you sold it?

Reply to
Tim

It won't necessarily all be taxed at the same rate. In fact it's impossible for it all to be taxed at 10%, since the £15k gain is very much more than the width of the 10% band.

If your other income is, for example, £10k short of the higher rate threshold, then £10k of the gain will be taxed at 20% and the rest at 40%.

Actually, that's not quite true. I gather that capital gains and interest are "counted first", since their basic rates are 20% and not, as for other income, 22%. So to return to the example of your other income being £10k short of HRT, then the first £10k of your gain will be taxed at 20% and the rest in effect at only 38%, since the first £10k displace other earnings from the 22% band into the 40% band.

I don't know what Peter's getting at, except perhaps that had it been let as FHA (which you've said it wasn't) then it might qualify to be treated as a business asset, which normal residential accommodation is not.

Reply to
Ronald Raygun

This is why I need help!!

I'm getting 2 properties mixed up!

The one I am talking about was let from the day we bought it to the day we sold it. Having said that - the buyer bought it with the tenants in place and did continue to let it.

We've just sold another one which was let from the day we bought it until 7/4/05 - which is for next years' return!

Reply to
Richard Faulkner

Thanks Ronald - I am conscious that it could be taxed at different rates but, as I dont think I have made much of a trading profit for the year, I am expecting it all to be taxed at 20% - and hoping that a bit might slip into the 10% band.

I am really trying to check that I am understanding the calculation as far as Chargeable Capital Gain - Once I have this figure, I am reasonably happy with the rest.

Definitely non business asset - more's the pity!

Reply to
Richard Faulkner

I was thinking of holiday letting. I didn't see Richard say it wasn't.

Reply to
Peter Saxton

He didn't originally [*], but he did in his reply to your direct question. My fault. I should have said "(which you've *now* said it wasn't)".

Reply to
Ronald Raygun

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