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Where Taxpayers and Advisers Meet

CGT on BTL when transferring one month into tax year

guardog
Posts:7
Joined:Thu Jul 03, 2014 4:58 pm
CGT on BTL when transferring one month into tax year

Postby guardog » Sun Mar 14, 2021 12:57 pm

I want to transfer my share of a BTL to my son on or about 30th April 2021. In the past you did not have to pay the tax until 31st January in the following year when you knew what your income was for 20/21 but now have to pay the CGT within 1 month of the sale/transfer. My question is that the only income you have will effectively be 1 month income from all sources ( 21/22) which would mean that tax would be at 18% in the most part however if the old rules applied then a small part would be at 18% and the majority would be at 28%. so what do I pay to the revenue now or just pay at 18% and then make an adjustment when I file my return later and have all the figures.
This has to happen on 30th April as the mortgage comes up for renewal and will then be in only my sons name

Any help/ advice would be most appreciated

Thanks

maths
Posts:8237
Joined:Wed Aug 06, 2008 3:25 pm

Re: CGT on BTL when transferring one month into tax year

Postby maths » Sun Mar 14, 2021 5:30 pm

For CGT the date of disposal is typically date of "exchange" not date of "completion".

If you "exchanged" on or before 5 April 2021 then the disposal falls into tax year 20/21 even if "completion" occurs on or after 6 April 2021. If however you "exchange" on or after 6 April 2021 the disposals falls into tax year 21/22.

The CGT payable is due together with a report within 30 days of "completion".

In calculating the CGT charge assume your income for the relevant tax year is as it would normally be (eg if your salary was £40,000 in say 20/21 assume and disposal in 20/21 use £40,000; if disposal in early 21/22 simply assume again income of £40,000 for 21/22).

Basically ignore other capital gains which may be made later in the tax year of disposal.

Take into account the annual CGT exemption.

Apply 18% and/or 28% rates as appropriate.

guardog
Posts:7
Joined:Thu Jul 03, 2014 4:58 pm

Re: CGT on BTL when transferring one month into tax year

Postby guardog » Fri Mar 19, 2021 12:09 pm

Thank you very much for that very clear and precise answer


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