How two Capital Gains Tax bills were reduced to zero

If you’re in a stressful situation such as you’re getting divorced or have had to move due to a disability, the last thing on your mind is likely to be a tax bill. It’s certainly not something that would cheer anyone up at the best of times, so in times of personal stress it’s just one more headache.

Fortunately a couple of our clients have benefitted this month from our tax specialist Denise’s advice on reducing their Capital Gains Tax liabilities relating to their homes. This came hot off the heels of our recent edition of Nordens TV on Capital Gains Tax (CGT) – since posting that video we’ve received a lot of enquiries from people either needing help or curious to know more. This tax must be paid on assets sold to third parties or gifted to family members, in particular residential property which is no longer your main residence, second homes and investment properties.

Working out the amount of CGT that must be paid can be tricky as it only needs to be paid if you make a certain amount of profit from the disposal of the asset in any given tax year.  You can watch the video to find out more about this here.

Capital Gains is obviously a very disliked tax, and clients sometimes arrive unhappy or distressed about the amounts due to be taken by HMRC. Luckily, our expert tax team are always on hand to help, advise, and soothe with a nice cup of coffee or glass of wine, while we talk through the tax-saving options available in our bag of tricks.

This month alone, we’ve prepared two interesting Capital Gains Tax cases for what we call “Main Residence” enquiries. (“Main Residence” means your home.)

The first concerned the transfer of a former marital home to our client’s ex-wife after he had moved out several years ago.

If a home has been used as the owner’s only or main residence at some time in his period of ownership, then the final 18 months he or she lived there will always qualify for relief. We made a claim under special provisions which allowed this final 18 month period of ownership exemption to be increased, giving our client greater tax relief. We can do this in circumstances where the property is transferred to an ex-spouse who continues to live there.

As he was in rented accommodation, the claim would not have an impact on him losing tax relief on his current residence, so he was very pleased with the result.

The second case concerned the sale of a former let property which the client had only lived in since the end of last year. Our client is disabled and, for this reason, we were able to advise him that the final period exemption could be increased – doubled from 18 months to 36 months.

In both of these cases the Capital Gains Tax liability was reduced to zero!

If you’re interested in finding out how CGT is worked out, what’s counted and what’s not, and whether you can reduce your tax bill, check out our Capital Gains Tax Service.

It’s also worth noting that significant changes are being introduced to the way in which Capital Gains Tax is reported from April 2020. All second home owners and landlords will need to notify HMRC of disposals of UK residential property within 30 days of completion and make a payment on account of the tax. We’ll tell you more about this nearer the time.

This autumn we’re offering you a free consultation to help you with your tax queries – whether they’re about Capital Gains or any other tax, so get in touch with our award-winning team to book your appointment.