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Gain on PPR - just checking

Gain on PPR - just checking

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I have a client who sold his former PPR.  There's a small gain as it wasn't his PPR for the last two or three years of ownership - about £3000.  

No other gains, so it's covered by his exemption.  Sales proceeds, however, are well over the limit.

Do I need to fill in the Capital Gains pages or will a computation in the "white space" do ?

Replies (8)

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By Paul D Utherone
30th Dec 2015 10:22

I would just do CGT pages

as a belt and braces.

If you've done the calculations anyway what harm can it do?

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Replying to lionofludesch:
RLI
By lionofludesch
30th Dec 2015 13:55

On reflection .....

Paul D Utherone wrote:

as a belt and braces.

If you've done the calculations anyway what harm can it do?

Yeah, you're all right.

On reflection, the hard graft is in the computation.

Thanks to all anyway.

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Stepurhan
By stepurhan
30th Dec 2015 10:28

Save time

HMRC have become a lot hotter in tracking property transactions in recent years. If you don't report it at all, you risk wasting time on a pointless enquiry down the road. Reporting it properly on the CGT pages also makes it more likely the details will be processed properly, because the information is in a format that can be ported by computer. White space entries seem to be more or less ignored half the time.

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Euan's picture
By Euan MacLennan
30th Dec 2015 10:52

It depends ...

If the client is in self-assessment and has to submit a tax return, it would be incomplete if you do not report the capital gain.

If the client is not in SA, there is no requirement to notify chargeability and hence, ask for a tax return to be issued, as there is no tax liability.

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By nogammonsinanundoubledgame
30th Dec 2015 14:46

2 questions, really

On the one hand what is the minimum legal disclosure, and on the other hand what is the appropriate practical disclosure.

I certainly agree with Euan that if no tax return has been issued, then there is no disclosure requirement, nor would I suggest that it would be appropriate to request a return or file a unsolicited return in that case

If a return is required anyway,then I also agree that the best practical approach is to include the disposal.  HMRC probably know about the disposal anyway, and it saves grief down the road.

I am not sure that I agree with Euan's assertion that there is a legal obligation to report it where a return is otherwise required.

Hopefully we agree that had the gain been wholly exempt by PPR, there would have been no reporting requirement.  PPR is not a claimed relief (except for DRR) but a automatic deduction in calculating the chargeable gain,and it is only where there is a chargeable gain that there is any prospect for a reporting requirement.

There are two tests for whether the CGT pages are required as a supplement to a (otherwise required) tax return:

1) If the net gains in the year exceed the annual exemption (which it does not in this case), or

2) If the gross proceeds of chargeable gains exceed 4 times the annual exemption.

I am assuming (and Euan can correct me if assuming wrong) that Euan's conclusion is based on the proceeds exceeding four times the annual exemption.  It is not clear to me whether you should apportion the gross proceeds between the exempt and chargeable gain, and only take into account the proceeds attributable to the chargeable gain for the purposes of this test.  But if apportionment is required, then it is likely that there is no reporting requirement (disregarding the practical benefits) even if a tax return is otherwise required or filed.

With kind regards

Clint Westwood

 

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By mickeyparish
06th Jan 2016 17:27

3 year grace period to dispose of Principal Property

 

This may have been changed in recent budgets, but I believe there is a grace period between moving out of a property and its disposal before CGT becomes applicable.  I thought the period was 3 years, however others who are more up to date may well correct me ?

 

The OP states the property wasn't his client's PP for the last 2-3 years of ownership.

 

There also was additional relief if the property was rented after moving out.  Is this still also the case ?

 

 

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Jennifer Adams
By Jennifer Adams
06th Jan 2016 17:38

HMCR will get details from Land registry,,,

this is an area of tax where HMRC know what they are doing. Land registry automatically tell them of sales of property. They also look at Council tax records. Their computer automatically does a match. Although no CGT due you should still put a note in the white box - there is no CGT so no CGT pages are needed. If you make a note in the white box they cant come back and say they were never told.

I know many members say HMRC dont look at the white box but if you dont complete then you have no defence. This is of course is a return is due - you are under no obligation to tell them if no return is due.

And I think the 3 years mickey is thinking of is the now last 18 months of PPR ownership is CGT free.

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RLI
By lionofludesch
06th Jan 2016 17:57

2014/15

Yes - sold after 5 April 2014 - so it's down to 18 months.

Not that that was an issue anyway - any gain was always going to be covered by the Annual Exemption.

Anyway - the return's gone now.

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