My wife and I extended three leases last tax year (completed 26/02/20) under the statutory process.
I have discovered that this has a potential charge to CGT which can be avoided by ESC D39 (I had assumed there would be no CGT impact in extending a lease and my solicitor didn't mention one, only possible SDLT. I only found out while trying to update my spreadsheet on possible CGT liability)
I have a number of questions as a result of this:
1. Do we need to include this on the CGT pages of our tax return and reference ESC D39?
2. If the answer to 1 is No then should we mention it in the white space on the main form?
3. We have two residences for PPR purposes and we've previously made a PPR election. If we were to change that election now and back date it the two years would the fact that we did the backdating after the leases were extended still affect the CGT calculation? (If for any reason ESC D39 doesn't apply then changing our election now could potentially save us around 3K in CGT and a months delay in making that election will cost us another 150GBP)
4 If ESC D39 does apply then is the base cost now the original acquisition cost plus the lease extension premium (where my googling started!)?
5. Does this count as a new set of residences for CGT purposes and so do we need to redo our CGT election?
In the worst case the CGT liability is around 10K, which is not disastrous but will be annoying in the extreme if so as we could have trivially made it zero by (a) making the PPR election before completing and (b) delaying one of the extensions until the new tax year.
But I'd prefer to use ESC D39 as I have some PPR on one flat that is now let that I would (I assume) lose plus the PPR that has been built up in the other two properties over the years that we would also lose and reset the clock.
Should my solicitor have at least advised us to get CGT advice? (it's possible he knew ESC D89 applied but unfortunately the firm is no longer in business