Capital Gain, 18 months to property sale relief

I have a client who just sold one of his properties. He used to leave in this property for 5 years,

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I have a client who just sold one of his properties. He used to leave in this property for 5 years, then rented it out in the last two years before the sale in October 2015.  He did not leave UK at any point so resident as far as earnings are concerned. Has rental income for one room as the flat was not fully occupied throughout the rental year. I propose not to enter rental income and capital gain on his SAR.  Am I correct in this treatment as I belief the last 18 months to the year of sale relief applies.

I appreciate any advice thank you very much for response.

Replies (7)

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By tjw
18th Jan 2017 12:16

I don't understand why the rental income wouldn't have to be declared regardless.

When I sold a property in the 2014/15 tax year that qualified for 95% PPR (never let) I included it on my tax return even though the taxable part of the gain was less than the CGT allowance.

The HMRC guidance wasn't clear. If there's 100% PPR then you don't have to declare it but whether the PPR relief allows you to use the exemption of a disposal less than the CGT limit when it's not 100% is ambiguous. I opted to declare anyway as it's fairly trivial when there's no CGT.

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Replying to tjw:
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By Tyra
18th Jan 2017 13:25

Hello tjw

Sorry about the way I phrase the question. I'll surely declare rental income regardless and provide necessary information on capital gain.
Thank you for your advice.

Tyra

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By Portia Nina Levin
18th Jan 2017 12:26

Are you saying that the income below the rent-a-room limit, and so is exempt?

I cannot see any other reason for not declaring the income.

If you need to file a tax return, you do also need to declare the disposal, even though it may be covvered by PPR/lettings relief.

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Replying to Portia Nina Levin:
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By Tyra
18th Jan 2017 13:24

Hello Portia

Sorry about the way I phrase the question. I'll surely declare rental income regardless and provide necessary information on capital gain.
Thank you for your advice.

Tyra

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By Wanderer
18th Jan 2017 12:40

I propose not to enter rental income and capital gain on his SAR. Am I correct in this treatment....

On the facts given & the way I am reading them you are incorrect on both points.

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Replying to Wanderer:
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By Tyra
18th Jan 2017 13:23

Hello Wanderer

Sorry about the way I phrase the question. I'll surely declare rental income regardless and provide necessary information on capital gain.
Thank you for your advice.

Tyra

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By andybailey
18th Jan 2017 14:37

Hi Tyra,

As you have updated, the rental income must be declared. As for the CGT I think I would report it. A rental business ceasing with no disposal of property or white space disclosure is likely to increase the chance of investigation from HMRC.

Andy

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