Do I need to submit a Tax Return

[noviceontax]

I am hoping that someone may be able to provide some guidance please.

I never normally have to complete a self assessment tax return as I have quite simple tax affairs and pay by PAYE, so I'm afraid this is all a bit alien to me !

I have recently sold a part share in a house that was my main residence for the majority of the time I owned it. Having calculated any potential Capital Gains Tax payable, and after taking into account the annual exemption amount of £10100, I have calculated that I actually have no Capital Gains Tax to pay.

On checking the HMRC website, their information suggests that CG tax submissions are required where CG Tax is payable. Presumably, as I have no CG Tax payable, and have not been asked by HMRC to submit a tax self assessment (and do not meet any of the other criteria resulting in the need to submit a self-assessment), then I do not need to submit a self assessment return in respect of the sale of this asset ? (I will of course keep my calculations and figures available in case of any future queries.)

Any guidance would be greatly appreciated. Many thanks !

[mullet]

Even if you have no CGT to pay, the general position is that you have to declare a disposal if sale proceeds are £42,400 or more and/or if you are claiming reliefs. That is simple for people who complete annual SA returns; they just complete the capital gains pages too. It then gets a bit fuzzy for people who are not in SA and don't complete annual returns. Everyone who does not receive a notice to complete a tax return (which is included on the return itself or in a "notice to file") is bound by law to notify chargeability to HMRC. OK, you're not chargeable ... but when the Land Registry and SDLT etc information filters in to HMRC and they match it with their records ... and think that you have failed to declare a property that wasn't your only or main residence throughout the period of ownership ... then dealing with HMRC from a compliance context can be quite daunting.

So on balance I would put it in a tax return. Although it is too late for you to file on-line on time if you are not already registered in the system.

[King_Maker]

The reporting limit for CGT disposal proceeds with no tax due is 4 x Exemption limit.

Therefore, for 2010-11 = £40,400.

If in doubt, I suggest you contact HMRC for their written instructions.

[noviceontax]

Thank you both for your helpful and very quick replies. It is much appreciated.

Thanks again !

[Peter D]

If you sold it recently then the CGA may well be £10,600 not £10,100 so and disposal over £42,400 is reportable to HMRC. Regards Peter

[noviceontax]

Hello Peter,

Thank you also for your response. The house was not sold recently - it was sold in mid-November 2010, so I think the CGA is £10100.

Kind regards, Marianne

[Peter D]

It was you that stated "I have recently sold a part share in a house " Put with your disposal date it will be £10,100, and you still need to rpeort the disposal in the property pages. How long were you not resident in the property and when ? Regards Peter

[noviceontax]

I wonder if I could run my calculations past you, in case anyone can spot any issues please. The facts are as follows:

50% share of my father's house left to me in May 2004.

Probate valuation at the end of May 2004: £107,500.00
Disposal in mid-Novembr 2010: £137,500

The house was my main residence from May 2005 until October 2009. My understanding is that I can therefore claim Private Residence Relief for the period of time that I resided in the property - I have retained Council Tax/household bills etc in case HMRC wish to see them. I also understand that the last 36 months prior to the completion of the sale qualifies for tax relief.

Therefore, for calculation purposes, I work back from the last 3 years prior to sale (i.e. from Nov 2010) as follows:

mid-Nov 2010 - mid-Nov 2007 = 36 months tax relief
mid-Nov 2007 - end of May 2005 = 29.5 months as main residence
end of May 2005 - end of May 2004 = period of possible liability for CG Tax as not living in the property

Total main residence was for 65.5 months out of a total ownership period of 90.5 months.

Therefore:

Probate Valuation: £107,500.00
Disposal: £137,500.00
Total Gain: £30,000.00
Private Residence Relief (PRR) = £30,000.00 x 65.5/90.5 = £21,712.71
Total Gain of £30,000.00 minus PRR of £21,712.71 = £8,287.29 Capital Gain
Minus annual exempt amount of £10,100.00 (for the 2010-2011 tax year) = (minus)-£1812.71

Therefore no Capital Gains Tax payable.

I also understand that there is no point in including references to house sale fees and legal expenses etc / house improvement expenditure as I am below the CG Tax threshold in any event.

I'm hoping to reflect this in my computations submitted, so any thoughts / guidance would again be much appreciated !
Many thanks.

[Peter D]

But you omly owned 50% of the property so the calculation is based on half the disposal value minus half the probate value so you have no CGT liability.
What was the property being used for when you did not live there. Regards Peter

[pqtaxation]

What was the property being used for when you did not live there.

Does it matter? ... as even if not let -and so no lettings relief- there is no CGT payable on OP's 50% interest .

But disposal is reportable (£137.5 *50%) by OP and by co-owner (if only one)

Owned May 2004 to Nov 2010 = ~78 months.

Period May 05 to Nov 10 covered by main residence (PPR) relief (last 36 months allowance covers Nov 09 to Nov 10 period when OP did not reside there)

So only 12 months May 04 to May 05 not unrelieved

Total gross gain of 50% interest = 50% of ~£30k

Unrelieved gain = 12/78 of 50% of 30k = ~ £2.3k

Which unrelieved gain is well below annual exempt amount