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Where Taxpayers and Advisers Meet

Deed of Gift

lawfra
Posts:8
Joined:Fri Jan 26, 2018 1:55 pm
Deed of Gift

Postby lawfra » Wed Dec 15, 2021 11:18 am

Hi,
I have a studio flat that I rented out for some years. I am in the process of transferring the property to my daughter by means of Deed of Gift. I recently had a valuation of my property by an estate agent and the value is less than what I have paid for a few years ago. Do I need to report to HMRC about the transfer as there is no capital gain?

maths
Posts:8429
Joined:Wed Aug 06, 2008 3:25 pm

Re: Deed of Gift

Postby maths » Wed Dec 15, 2021 6:11 pm

If you do not receive a Tax Return to complete there is no need to return any chargeable gains made assuming that:

(a)the amount of chargeable gains accruing to a person in a tax year does not exceed the annual exempt amount for the year applicable to the person and

(b)the total amount or value of the consideration for all chargeable disposals of assets made by the person in the year does not exceed four times that annual exempt amount,


If (a) and (b) above are satisfied but a Tax Return is issued all that needs to be stated on the Return is that these conditions are satisfied.

If an allowable capital loss has been made made it may need to be claimed on the Tax Return if you wish to offset it against any capital gains.

lawfra
Posts:8
Joined:Fri Jan 26, 2018 1:55 pm

Re: Deed of Gift

Postby lawfra » Thu Dec 16, 2021 10:21 am

Hi Maths,
Thank you for your prompt reply. With regards to condition (a) I certainly satisfy this as there is no capital gains at all since the recent valuation for the property is less than the price bought previously. As to condition (b) I need further clarification please. Are you saying that if all the disposal is less than 4 times the capital gains allowance then there is no capital gains tax to pay? If this is the case, then condition (b) is also satisfied as I am only gifting a property to my daughter. The question is do I need to report to HMRC via their Real Time Capital Gains Service even though I haven't made a gain? Also how does HMRC knows that there isn't a gain if I do not inform them? Your help is most appreciated. Thanks

pawncob
Posts:4877
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Deed of Gift

Postby pawncob » Thu Dec 16, 2021 12:26 pm

(b)the total amount or value of the consideration for all chargeable disposals of assets made by the person in the year does not exceed four times that annual exempt amount,
VALUE or consideration. A market value is applied, so a gain may still arise.
With a pinch of salt take what I say, but don't exceed your RDA

someone
Posts:543
Joined:Mon Feb 13, 2017 10:09 am

Re: Deed of Gift

Postby someone » Fri Dec 17, 2021 2:39 am

I thought a) meant - if there's tax to pay you have to declare it.

while b) meant - if you already have to do a tax return then you have to include it even if there is no tax to pay.


If I've understood correctly then in the op's case as described there is no gain so a) doesn't apply but (probably) b) means that if the op already does a tax return they will have to include the CGT pages even though there will be a loss and no tax to pay.

(the op might want to record the loss anyway if they have unrealized gains elsewhere)


If I was HMRC I'd probably look hard at any disposal like this that claimed to have been at a loss over the last few years. Press headlines at least would suggest gains of 10-30% probably aren't unreasonable!

lawfra
Posts:8
Joined:Fri Jan 26, 2018 1:55 pm

Re: Deed of Gift

Postby lawfra » Fri Dec 17, 2021 6:26 pm

Thanks Guys,
As the transfer will not complete till early next year and that I have already submitted my paper self assessment for 2020/2021 should I still send the capital gains tax form for this tax year (if it completes in this tax year) or declare it on my self assessment for 2021/2022. Should I also complete the Real Time Capital Gains Service when the transfer is completed?

pawncob
Posts:4877
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Deed of Gift

Postby pawncob » Fri Dec 17, 2021 7:22 pm

You can't report it until it's sold.
Then do it to comply with time limits.
With a pinch of salt take what I say, but don't exceed your RDA

maths
Posts:8429
Joined:Wed Aug 06, 2008 3:25 pm

Re: Deed of Gift

Postby maths » Fri Dec 17, 2021 10:41 pm

If you sell between now and 5.4.22 then it's relevant only for the 21/22 Tax Return.

You are not required to complete the so-called "real time" return.

If you receive a normal Tax Return for 21/22 in due course, then you only need to state on the Return that:"(a) and (b) above are satisfied".

[(a)the amount of chargeable gains accruing to a person in a tax year does not exceed the annual exempt amount for the year applicable to the person and

(b)the total amount or value of the consideration for all chargeable disposals of assets made by the person in the year does not exceed four times that annual exempt amount],

maths
Posts:8429
Joined:Wed Aug 06, 2008 3:25 pm

Re: Deed of Gift

Postby maths » Fri Dec 17, 2021 10:47 pm

Someone
I thought a) meant - if there's tax to pay you have to declare it.

while b) meant - if you already have to do a tax return then you have to include it even if there is no tax to pay.
Not quite.

(a) and (b) are the conditions which if both are satisfied then no return with respect to the disposal (gift or otherwise) is necessary for CGT purposes.

But IF a Tax Return is sent out by HMRC then still don't need to disclose the disposal figures but merely need to state on the Return that the conditions (a) and (b) are satisfied; that's it.

lawfra
Posts:8
Joined:Fri Jan 26, 2018 1:55 pm

Re: Deed of Gift

Postby lawfra » Sat Dec 18, 2021 12:52 pm

Thanks everyone for your advice. Much appreciated.


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