CGT as a single person and getting married

[jen15]

Hi,

I cant find my previous post so I have started another question and hope you can help please?

I am engaged and wondering if I could help myself re CGT by waiting to sell a second property until after the wedding?

These are the figures.

Gross gain on sale of second property £50,600
Minus My CGT allowance 10,600
Other income in same tax year £3,120
Do I also use my personal tax allownace here? If I do it's for a single person £7,475

Can you please tell me what I would pay in CGT as a single person. and also if I got married a couple of months before the sale if this would help?

Many thanks

[maths]

Is this a property in which you live or a property you rent out?

[jen15]

Hi,
It has been rented and now I am due to sell it soon. Never lived in it.
Jen

[maths]

Any gain will be taxable albeit less £10,600 (annual exemption); no lettings relief applies as it has never been lived in by you.

Thus the taxable gain is approx £40,000. A sale in this tax year will cause the gain to be taxed at 18% on £35,000 and 28% on £5,000.

A sale after 5 April will cause the gain to be taxed at 18% on £34,370 and 28% on £5,630 (assuming your other income is no more than £8,105 next tax year) ie marginally more.

If after marriage you transfer part to new husband he will be able to use his £10,600 against his gain but depending upon his taxable income level his gain may be taxed higher than yours which almost certainly be the case if he has taxable income (which you do not).

If you transfer part to him before marriage he will acquire his bit at current market value which means when he sells basically no CGT on his part. However, CGT will still be due on your part on the bit you transfer (assumed to be at market value).

Perhaps best option is to transfer after marriage sufficient interest to him such that on sale his gain is absorbed by his £10,600; at that time no CGT for you as transfer exempt inter-spouse transfer.

Alternatively you could transfer sufficient to use your £10,600 before 6 April and then on or after 6 April transfer another amount to use your £10,600 in the new tax year. No CGT on his party assuming a quick sale.

However, the above depends upon the facts as to whether you are already proceeding with a sale having found a buyer. Also if you do transfer to him any sale proceeds are his not yours.

[jen15]

Thank you.

Could you please do the sums for the CGT that I would pay as a single person, I am no good at working it out!

So on a capital gain you mention of 40,000 what is 18% of 35,000 and 28% of 5,000?

How is my personal tax allowance used, do I not get this since my other income will be only £3,120 and my allowance is £7,475?

Thanks
Jen

[Peter D]

The allowance is only used in an Income Tax calculation not a CGT calculation. What date is the wedding. Have you signed the exchange of contract yet or do you have a planned date for that. Regards Peter

[jen15]

Hi,

We were thinking of late May. Nothing signed on the property just an offer at this stage.

Would love to know what 18% of 40,00 and 28% of 5,000 is please?

Also wish I had paid more attention to maths at school!

Thanks a lot

[jen15]

That should be £40,000 not £40,00
Jen

[RAL]

H
Would love to know what 18% of 40,00 and 28% of 5,000 is please?

Also wish I had paid more attention to maths at school!

Thanks a lot

40,000x18% = 7,200
5000x 28% = 1,400

Total = 7,200+1,400 = £8,600.

[jen15]

Thanks Ral.

Just thinking of something else, instead of doing all these transfers to my future husband could we do this:

We are not moving away from this area until the end of this year, so we could move into the property after we are married (late May) and stay there until November and sell it after this. This would mean I would have lived there, but only for 6 - 7 months, would this help?

I would of course still have my small flat which I want to keep as an investment, I don't intend to rent this but just to keep it.

Does this make any sense please?

Jen