CGT – inter spouse transfer and PPR re: sale of rental property

[Norman Stanley]

CGT – inter spouse transfer and PPR re- sale of rental property
New client is late in reporting CGT and paying CGT in 30 days.
Would be grateful for confirmation that H not entitled to any PPR & resulting in CGT tax for wife of £274 but husband of £2,436.
See below for facts.

Jan 2007 – Wife (W) acquires property (P1) for £147K which is her sole PPR.
Oct 2009 – partner moves in (not yet married & he owns no other properties).
May 2011 -both move out and purchase a joint property (P2) that becomes their PPR.
May 2011- P1 is let.
Aug 2011 – they marry after having moved out of P1 in May 11.
Aug 2018 - P1 is transferred into joint names. Land registry shows title absolute in names of W & H.
Nov 2011 - P1 is sold for £189K. Gain = £21K each (£189K-£147K=£42K x 50%).

1. W - CGT to pay in 30 days being a HR tax payer is: Gain £21K Less PPR (61m/166m) * =(£7.72K) Net Gain = £13.28K less AA (£12.3K) = £980 chargeable
CGT due for Wife at 28% (HR) x £980= £274 tax to pay (W’s)

2. H - CGT to pay in 30 days being a HR tax payer is: Gain £21K less 0** PPR relief less PA (£12.3k) = £8.7K chargeable
CGT due for Husband at 28% (HR) x £8.7K =£2,436 tax to pay (H’s)

H & W have no other gains for 2020/2021.
* tax free PPR for W is 61m (Jan 2007 – May 2011 = 52m + final 9m deemed PPR). * Total ownership period is 166m (Jan 2007 -Nov 2020)
** no PPR for H on grounds that he was not living at P1 at date of transfer in Aug 2018. H Inherits half base cost of W but not her half PPR even though he was cohabiting at P1 from Oct 2009 to May 2011.

Any assistance much appreciated.
p.s. what are the penalties/ interest for late reporting. need to break the news gently if above calc. is correct.
Many thanks
Norman Stanley