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Where Taxpayers and Advisers Meet

Impact of abolishing lettings relief

bd6759
Posts: 2890
Joined: Sat Feb 01, 2014 3:26 pm

Re: Impact of abolishing lettings relief

Postby bd6759 » Wed Nov 07, 2018 8:25 pm

Ignoring Nicola tax in Scotland, in most of the UK you pay tax at 20% up to the limit of the basis rate band, and at 40% above that.

Your chargeable gains are considered as if they were your top slice of income and the rate of tax is determined from that.

Pretend that the basic rate band is £30000. All the figures that follow are net of allowances and reliefs.

Scenario A: Income £20,000, gains £10,000. Income will be taxed at 20% and the gains taxed at 18%

Scenario B: Income 40,000, gains £10,000. £30,000 income will be taxed at 20% and 10,000 at 40%. The gain of £10,000 is taxed at 28%

Scenario C: Income £10,000, gains £40,000. £10,000 income taxed at 20%. £20,000 gain taxed at 18%, and £10,000 taxed at 28%.

Stranger99
Posts: 9
Joined: Sun Nov 04, 2018 5:22 pm

Re: Impact of abolishing lettings relief

Postby Stranger99 » Thu Nov 08, 2018 9:05 pm

Thanks a lot for taking the time to do these examples. It makes sense to me now how the rules work.

bd6759
Posts: 2890
Joined: Sat Feb 01, 2014 3:26 pm

Re: Impact of abolishing lettings relief

Postby bd6759 » Thu Nov 08, 2018 11:09 pm

Even with my nonsense arithmetic in scenario C?

Stranger99
Posts: 9
Joined: Sun Nov 04, 2018 5:22 pm

Re: Impact of abolishing lettings relief

Postby Stranger99 » Fri Nov 09, 2018 3:21 pm

I thought that was maybe just a test for me :)
Should be £20K at 28%, assuming I've grasped the rule OK now?

bd6759
Posts: 2890
Joined: Sat Feb 01, 2014 3:26 pm

Re: Impact of abolishing lettings relief

Postby bd6759 » Sat Nov 10, 2018 12:23 pm

:idea:


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