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The dreaded Capital Gains


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I rented out a house out from 2004, when the tenant left i decided to do it up and moved into it myself in 2006, selling it last november having lived there for almost a year.

I it seems i have to pay CGT as it was not my permenant reidence from acquiring it.

I've have followed the form form fine but cannot get clear insight as to what the acceptable 'Improvement costs' are. Apart from acquisition costs and taper relief is there anything else ive missed? (as the house was acquired through divorce I also 'adopt my ex's years of taper relief)

Any tips appreciated!


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Hi Jin

It depends on the facts and figures. There will be actual and deemed PPR relief for some of the period, plus other allowances and reliefs. Plus as you sold it in 2007/2008 there could be further potential to reduce the effective rate of tax down to 18% (minimum for landlords up to 2007/2008 was 24% unless the gain was basic rate tax), so there could be opportunities to reduce your liability.

Are you calculating your CGT yourself? It may be worth you discussing with a tax adviser to make sure that you claim all of the reliefs to which you may be entitled.

As far as improvements, again it really depends on what you are doing as to whether something is allowable or not. The key is whether it is capital improvement or revenue repair and maintenance. For example, building a new porch or conservatory would be an improvment, but repairs to a slate roof are more likely revenue expenses. Have a look at the property income manual http://www.hmrc.gov.uk/manuals/pimmanual/index.htm

If you don't have an accountant/tax adviser and are looking for assistance, email me on sherena.glanton@target-accountants.com and we can go from there.

In the meantime I hope this helps.


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