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CGT on property gift

Practical Issues
wickham
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CGT on property gift

#443227

Postby wickham » September 18th, 2021, 7:49 am

I understand that CGT on property gains has to be made and paid within 30 days of the transaction.

I have a gain on the sale of a gift from my father, so if I declare and pay CGT now, and make losses on my investments as planned before my next tax return for 2021-22, how do I set those losses against a tax already paid?

I will probably claim the annual exemption of £12,300 against the property CGT now, (together with exemptions for improvements,) as there will be no point in setting the annual exemption against investment losses later.

Will I have to make a further claim to set my investment losses against the property gain already made and paid? If so, how? It would mean a reimbursement of CGT. HMRC may be reluctant to repay me. I was intending to delay the property gain until I can sweep it up in my next tax return and set investment losses against it, but it seems that HMRC have set up the system so that I won't be able to do that.

fisher
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Re: CGT on property gift

#443293

Postby fisher » September 18th, 2021, 12:37 pm

I had a similar situation in the last tax year. Unfortunately the government did not think all of this through properly when passing the legislation that compels you to pay the CGT owed within 30 days of a sale, and HMRC created a system which does not work fully. That said, the has been a lot of consultation on this and there is a solution.

You need to fill in your property CGT calculation using your "Capital Gains Tax On UK Property Account" and pay the CGT owed within 30 days of the sale. Do not allow for anything further that you might do in the tax year (such as sell shares at a loss) at this stage. Pay the CGT owed on the property.
If you're not sure what tax bracket this will put you into you will have to err. in the tax man's favour or else later on you may be fined for underpayment of tax

When you later sell shares or other assets and create a CGT loss you can amend your earlier Property Return. You can also recalculate what tax band you are in and amend what you owed on the property CGT if applicable. This should then automatically generate a refund of overpaid Capital Gains Tax. Do this BEFORE submitting your full Tax Return for this tax year.

What you shouldn't do (which I did) is to submit your full Tax Return after the end of the tax year where you notify them of previously notified property sale and the share loss for the first time. When I did it this way, it does register the overpayment of CGT, but there is no automated process to refund you, so you have to ring up to request a repayment. I did this last month and was told the repayment would be with me by 21/09/2021 at the latest which is next Tuesday. I am not holding my breath! If you submit your full Tax Return you can not then amend the interim Property Return.

More info here: https://www.tax.org.uk/cgt-on-property- ... verpayment

wickham
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Re: CGT on property gift

#443313

Postby wickham » September 18th, 2021, 2:32 pm

Thanks for the advice. I thought I might have to amend the property CGT, so this will be after the end of the tax year when I get a schedule of losses from the financial manager, but before I submit a tax return.

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Re: CGT on property gift

#443348

Postby fisher » September 18th, 2021, 5:16 pm

Yes - that is my understanding based on the current situation. Of course they may fix their systems in the mean time and the advice may change.


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