Who can answer AR's CGT question?

I note KM struggled with a similar scenario here: https://www.taxationweb.co.uk/forum/ppr-married-co

Didn't find your answer?

Angela Rayner faces questions over whether she should have paid Capital Gains Tax on the sale of her former council house | Daily Mail Online

https://www.dailymail.co.uk/news/article-13128695/angela-rayner-council-...

PPR - married couple live separately, 2 properties -Tax Forum :: Free Tax Advice (taxationweb.co.uk)

https://www.taxationweb.co.uk/forum/ppr-married-couple-live-separately-2...

Where's DN when you need him (perhaps he can enlighten us)?

I guess the quid pro quo must be that hubby loses his PPR relief for the relevant period, but it seems strange that married taxpayers can pick and choose like this when there is no scope for a nomination (assuming they do not have an interest in their spouse's property). What if they disagreed which one was their PPR (considering they can only have one PPR between them)?

Replies (30)

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By Ruddles
27th Feb 2024 13:49

Why would you say "there is no scope for a nomination"?

Or are you referring to the specifics of this case (which I have not read, as I tend to steer clear of the Daily Fail at all costs)?

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Replying to Ruddles:
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By Justin Bryant
27th Feb 2024 14:07

The question assumes that the spouse making the disposal has never had an interest in the other spouse's property (which I assume are AR's facts, like in the above similar taxationweb question). I believe you can only make a PPR nomination if you have a beneficial interest in another PPR property (which could even be a valueless AST) notwithstanding your spouse may own their own PPR property 100%. If that's wrong, please cite the relevant law (I'm not saying it's right - I have no time to check it today).

Even if a PPR nomination was possible in such circumstances, perhaps she didn't make one (in time)?

We really need DN to investigate this (but I suspect he may be reluctant to do so).

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Replying to Justin Bryant:
By Ruddles
27th Feb 2024 15:29

You said that "married taxpayers can pick and choose like this when there is no scope for a nomination".

But since a married couple - say marrying when they each own 100% of their own residence - can have only one main residence for PRR purposes they need to make a joint election. If they fail to make the nomination (perhaps because they can't agree on which property to nominate) then treatment will depend, as it always does, on the facts. You will need to explain your comment about there being no scope for a nomination.

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Replying to Ruddles:
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By Justin Bryant
27th Feb 2024 15:40

Please try reading things properly. The assumption (made very clear above) is that each spouse only owns (i.e. has a beneficial interest in) just one property. To make a PPR nomination in the 1st place (I believe) you have to have a beneficial interest in at least 2 properties (e.g. a 12 month AST rental agreement for another dwelling would be enough). (It's on very rare occasions like this that I wish PNL hadn't been banned.)

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Replying to Justin Bryant:
By Ruddles
27th Feb 2024 16:04

It is you that needs to read things properly - your assumption is exactly what I said - each spouse owning 100% of their respective residences.

I can't be bothered trawling through case law - to use your standard excuse, I am too busy - but HMRC at least are seemingly content that a joint nomination is available in the circumstances that I (and you) set out.

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Replying to Ruddles:
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By Justin Bryant
27th Feb 2024 16:12

Well, HMRC are possibly wrong to accept a PPR nomination in such circumstances and in any event there's no evidence she made one.

This old PPR nomination thread seems to support that view: https://www.accountingweb.co.uk/any-answers/ppr-election-2

The CG Manual here implies that to make a joint PPR nomination they need to be living together in at least one of their respective properties (which is not relevant here): https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64525

If KM couldn't readily answer this question it's bound to be tricky.

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Replying to Justin Bryant:
By Ruddles
27th Feb 2024 17:28

Justin Bryant wrote:

The CG Manual here implies that to make a joint PPR nomination they need to be living together in at least one of their respective properties

No it doesn't. That is your inference.

And I don't see the relevance of that other query - s222(6) is not mentioned once.

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Replying to Ruddles:
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By Justin Bryant
27th Feb 2024 17:40

Well, if I'm wrong and they can nevertheless make a nomination, what if they miss the deadline? Can they nevertheless (retrospectively) pick & choose any time later as stated above? That seems wrong given that a nomination is time limited and this may have been what AR actually did. But if that's right then such spouses should perhaps be advised to "wait & see", rather than making an in-time nomination.

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Replying to Justin Bryant:
By Ruddles
27th Feb 2024 19:08

That is a whole different discussion. In fact there was a recent thread on that very point recently which, IIRC, did not result in a consensus. I myself changed my mind at least twice during the debate.

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Replying to Justin Bryant:
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By More unearned luck
27th Feb 2024 19:45

Why do you think that, in the absence of a nomination, a couple in Mr & Mrs R's position get to pick and choose the MR? Why isn't it determined by the facts?

No doubt what the couple assert will be one of the facts and it might carry some weight. And, of course they will have some control over what evidence is adduced.

The idea that a couple living in sperate houses but nonetheless 'living together' can't make a nomination must be an over literal interpretation of the law.

What is the difference between the facts of Mr & Mrs R's case and the case where a couple live in the same house but it and a second residence is owned by only one of them ?

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Replying to More unearned luck:
By Ruddles
27th Feb 2024 20:09

To be fair, much of the legislation dealing with PRR is not particularly well-written and open to interpretation - as evidenced in that other thread I was referring to.

For example, in s226(6)(a) -“ there can only be one residence or main residence” I assume there is a reason for the “residence or” but the need for it isn’t immediately obvious to me.

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Replying to More unearned luck:
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By Justin Bryant
28th Feb 2024 09:17

Perhaps there is no loophole if on the facts they actually live together (at least for some time) in just one of the properties, in which case that should be their only marital PPR on the facts, construing the legislation purposively.

Being married supposedly restricts your ability to make a PPR claim in the 1st place and yet here there seems to be a loophole whereby there is effectively no such restriction provided they either live separately in their respective 100% PPRs or they live in both (i.e. while that's the case they can pick & choose which property is the PPR retrospectively (i.e. in the meantime they effectively have two PPRs they can choose from), which goes against spirit of the legislation for married couples and time limited nominations and so if it works it looks like a loophole - but then MPs are renowned for being expert at exploiting PPR loopholes aren't they?)

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Replying to Justin Bryant:
By Ruddles
28th Feb 2024 12:34

Justin Bryant wrote:
(i.e. while that's the case they can pick & choose which property is the PPR retrospectively (i.e. in the meantime they effectively have two PPRs they can choose from),

That is only if you subscribe to the view that the 2-year time limit is ineffective (a view held, I believe, by your pal KG) so that one can go back up to 2 years from any point in time. I'm still not sure which side of the fence I'm sitting on, but the alternative view is that the 2-year time clock starts running as soon as there is a question* as to which property is the PRR, eg either on acquiring a second property or a couple each with their own residence becoming married.

Logically, I consider the alternative view to be more sound, but acknowledge that the legislation can be interpreted differently. Per my above comment that much of the PRR legislation is lacking in clarity - for example, when does the question* actually need to be asked - on that change of combination of residences, or only when it matters, eg on sale?.

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Replying to Ruddles:
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By Justin Bryant
28th Feb 2024 12:46

Let's perhaps agree that AR has (to use your favourite word) "probably" (and possibly unwittingly) successfully dodged CGT here.

DN, eat your heart out.

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Replying to Justin Bryant:
By Ruddles
28th Feb 2024 13:21

I refuse to offer an opinion based on anything presented in the Daily Mail (other than it is likely to be inaccurate at best).

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Replying to Ruddles:
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By Justin Bryant
29th Feb 2024 12:39

Not sure why you're singling them out as they're all more or less (or even probably) as bad as each other in that regard and see here right on cue (I would give her the benefit of the doubt in the meantime): https://taxpolicy.org.uk/2024/02/29/rayner/

(Also, I note that John Barnett correctly points out a schoolboy error in DN's PPR analysis.)

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Replying to Justin Bryant:
By Ruddles
29th Feb 2024 15:29

I'm not singling them out. If the article had been in the Sun or any other redtop I would have said exactly the same. But since this about an article in the Daily Mail ...

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Replying to Justin Bryant:
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By Justin Bryant
16th Apr 2024 11:43

I think the "wait & see" CGT loophole still works notwithstanding this DN analysis: https://taxpolicy.org.uk/2024/04/12/living_with_spouse/

In fact, no-one ever argued you could have two PPRs simultaneously for married couples, so I'm not sure what he's on about.

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Replying to Justin Bryant:
Stepurhan
By stepurhan
16th Apr 2024 13:51

Justin Bryant wrote:

I think the "wait & see" CGT loophole still works notwithstanding this DN analysis: https://taxpolicy.org.uk/2024/04/12/living_with_spouse/

In fact, no-one ever argued you could have two PPRs simultaneously for married couples, so I'm not sure what he's on about.

I'm not sure what you're on about, since you appear to be badly misreading the article that you linked to if that is your takeaway from it.
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By Justin Bryant
01st Mar 2024 14:10

In other words, she's read our erudite comments here giving her the thumbs up and that's good enough for her I expect: https://www.bbc.co.uk/news/uk-politics-68428229

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By FactChecker
01st Mar 2024 14:55

Not sure she requires any comments (erudite or otherwise) from here if she's happy to be quoted by the BBC as saying:
- she was not liable because it was her home and the "only one" she owned;
- and that her then husband "already owned his own home independently".

But if I understand correctly what's in that report, she got married in 2010 and sold her property in 2015 (after registering the births of her children at the address of the property 'owned by her husband').
So her primary residence wasn't where her husband and both children resided (and without being prurient where she certainly spent much time herself)?

Anyway I'm sure she's fine as she obviously endorses one of your bête noirs ... she says she has had expert tax advice, which has "confirmed" her position.

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By More unearned luck
18th Apr 2024 11:56

"(after registering the births of her children at the address of the property 'owned by her husband'.)

What is this concept of (re)registering births at a particular address? The information initially recorded by the registrar includes the place of birth and the address of the informant (who might have been the father for all we know). The parents' address isn't given unless one of them is the informant. Nor is the child's. address given.

Births can be reregistered to add the father's details if it was not originally included or to change the child's surname where the parents subsequently marry. Of course the applicant has to give an address (who again might have been the father?).

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By FactChecker
18th Apr 2024 18:14

Blimey ... 7 weeks later!

But I accept that the parenthesised extract was unnecessary (in the sense that it neither aided nor refuted my main point) ... it was only included because the BBC News item from which I was quoting made a big thing of that aspect (showing I guess that we all fall occasionally for the prurient angle).

The key point (as reinforced below within the reference to the DN article in New Statesmen) however remains. AR plainly didn't understand the pertinent tax rules ... so it's what she has (or hasn't) done since discovering those rules that is (and indeed should be) of real interest

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By More unearned luck
18th Apr 2024 19:51

I'm a slow reader.

Since your thesis is AR's failure to understand complex and counter intuitive tax terminology (see DN's point on 'living together') led to the omission if there was an omission, you can not consider any omission from her tax return to be deliberate. The quid pro quo for taxpayers being responsible for assessing themselves is a limit on HMRC's power of assessment. Where the omission arises from carelessness HMRC had six years to discover and assess the omission. So, she has nothing to do next (other than possibly make a voluntary donation to HMRC).

If AR hasn't filed a TR for the relevant year then her failure to understand complex rules may amount to a reasonable excuse (Christine Perrin) with the same result; HMRC are out of time to assess.

But if far from certain that there was an omitted gain or failure to notify.

On the (re)registering at an address point this is at best shorthand for the address of the informant/applicant, but to me sounds like journalists don't know what they are talking about (a novel charge, of course).

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By Justin Bryant
17th Apr 2024 11:39

There's a good, detailed analysis here by someone who (unlike DN) obviously knows his onions and who like me gives AR the benefit of the doubt:
https://www.taxationweb.co.uk/tax-articles/capital-gains-tax-cgt/the-mp-...

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Replying to Justin Bryant:
Stepurhan
By stepurhan
18th Apr 2024 12:46

For those that would like to judge an analysis by Dan Neidle on its own merits, rather than just taking Justin's word for it he doesn't know what he is talking about, you can find one here.

https://www.newstatesman.com/politics/2024/04/i-looked-into-angela-rayne...

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By FactChecker
18th Apr 2024 18:06

A simple and clear exposition ... that starts at the same point that I did:
"It’s true there’s a capital gains tax exemption when a person sells their “main residence”. But married couples are only permitted one main residence between them. Rayner married Mark Rayner in September 2010 and so, from that point, they had one main residence."

Unlike me he goes on to lay out the possible actualités ... but what seems to puzzle him as much as me is that AR hasn't deigned to state which of these applies.

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By FactChecker
18th Apr 2024 18:35

Interesting ... but it seems obvious (to me) that for any of his 'Six Curious Angels of Tax Redemption' to have even a chance of riding to the rescue would require AR to have taken tax advice at the time.
And there's no evidence of that - either in terms of her public statements that demonstrate a common-but-incorrect understanding of the basics, or in her lack of willingness to provide a copy of such advice (even to Sir K).

FWIW I didn't read the article as giving AR "the benefit of the doubt" ... simply a well-written article that expounded on the possibilities as one would expect from a qualified tax adviser and experienced journalist.

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By Justin Bryant
19th Apr 2024 09:05

DN (and a certain person here) wrongly stated that property improvements will be CGT deductible, but that is rubbish as that is only in limited cases where the improvements are of a capital nature and the majority of home improvements (e.g. new double glazing, new boiler, new kitchen, new bathroom etc.) aren't in that category of course (that only potentially includes things like a new conservatory, a new loft extension etc.), and it looks like she received such (wrong-looking) supporting advice (probably from a thicko Aweb member who believes everything DN says is gospel) after the event so to speak.
https://www.dailymail.co.uk/news/article-13322983/Angela-Rayner-claim-ne...

As for the above Taxationweb article, he says "This article has offered a veritable host of reasons as to why it would be wrong to suppose that something is amiss with this particular taxpayer’s tax affairs."

That reads to me as giving her the benefit of the doubt.

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Replying to Justin Bryant:
By Ruddles
19th Apr 2024 15:15

Justin Bryant wrote:
DN (and a certain person here) wrongly stated that property improvements will be CGT deductible,

Where did that certain person here state that (all) property improvements will be CGT deductible? I suspect that you are yet again demonstrating your inability to understand plain English.

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