CGT, unearned income?

[puressence73@yahoo.com]

Hi All,

I have a questions that is proving very hard to find an answer to.

I have recently divorced and as part of the process had to liquidate 2 buy to let properties. The proceeds from the sale was given to my ex wife as way of settlement, but as the properties were in my name I will attract the CGT's next year.

I have already accounted for paying the CGT's, but it occurred to me that gain figure obtained from the sale may be taken into account by the Child Support Agency when they calculate my annual renewal next year.

I gave them a call and they advised me that they only take into account earned, and unearned income, but it's not clear to me whether the disposal of the 2 properties will be classified as unearned income or not.

If it is, it looks like my child support payments would be increased based on a cash sum I never received, which appears to be a bit unfair.

Any advice would be greatly appreciated.

Regards

Matt

[AGoodman]

That's purely a CSA question - not tax. I would be surprised if anybody here knows.
That said, earned income would not usually include an investment capital gains

[puressence73@yahoo.com]

That’s the thing they don’t know.

It’s a basic tax question in my mind, and that’s whether the CGT’s showing on my tax return will be considered the result of unearned income, such the same way dividends from shareholding’s would.

[AGoodman]

For tax, it's not income.

But the CSA may not follow tax rules, they may have their own definitions

[puressence73@yahoo.com]

I get that, but by definition then does the disposal of property as an asset classify as unearned income, as the CSA take into account both earned and unearned income as displayed on your return.

Which takes me back to my original question, which is how will the CGT’s be classified on the disposal of assets.

[bd6759]

Under UK tax rules, gains are not income (neither earned nor unearned).

CSA rules follow the tax rules - see step 1 https://www.gov.uk/how-child-maintenance-is-worked-out/how-the-child-maintenance-service-works-out-child-maintenance