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Agreed. It is ridiculously complicated. Just doing a vanilla NRCGT return can easily take at least half a day getting all the info. etc.
TBH this has always been unexpectedly complex at times.
Throw in an unmarried couple who own their own properties, sell one and replace it, then let one out, then get married etc etc.
All good points Rebecca. As I noted in my article on this subject in Taxation Magazine some weeks ago it is interesting to speculate what might constitute a "just and reasonable" apportionment of the gain where say a cottage that has formed part of 1,000 acre farm has been disposed off, and the disposal is treated as a part disposal of the farm. HMRC might argue that the apportionment should be on a value basis, or some other method, but why not an area basis which might mean that the percentage of the asset (the farm) that had been used for residential purposes was very small and produce a much better result for the taxpayer. There is nothing "just and reasonable" about adopting a method that produces the best result for the exchequer in my view.
If the value of the field in Rebecca Cave's example had increased prior to building the house, say to £120,000 (& assuming there was something to support that value), would it be possible to calculate the gain on the land on its own separately from the final property?
In this case - gain on land £70,000, taxable @ 20% = £14,000;
gain on residential property £400,000 minus £(120,000+150,000) = £130,000, minus exemption £11,100, taxable @28% = £33,292;
total CGT payable = £47,292? (i.e. a saving 0f £2,400 from moving £30,000 of the gain from residential @ 28% to non-residential @20%)
To add to complexity we also need to consider has the taxpayer had a period of Non UK Residence, since 6 April 2015.
I always thought a paddock could be treated as part of the garden and grounds (assuming it was within the permitted area) unless there was significant business or agricultural use.
For instance, if you kept your own horses there, it would qualify for the PPR exemption (if applicable) but if you charged other people for keeping their horses there, it wouldn't.
Does anyone have any experience in dealing with overseas property gains and how it can be re-invested in purchasing a property in the UK tax efficiently?
I have a client who has disposed of a property which they have changed the status of throughout their ownership. Starts off as Private residence, so have calculated PRR; then they kept changing between FHL and Long-term let. Do I apportion the gain between the 10% and 18% on the length of time the property was used for each purpose; or can the gain all be rated at 10%; or worse case 18%?