CGT in UK.

[Gastines]

I note that Darling DarlingM.P. seems to be following the French CGT system,April 1 st new rules aplly to any part of your main home used for businessplus chasing up income from Rental properties etc.Article in the Times today gives most details.

Regards.

[Kitty]

I assume this is the article?

http://property.timesonline.co.uk/tol/life_and_style/property/investment/article3453206.ece

Where is the bit about using your home as an office?

[Ian]

Paragraph 8

[Gastines]

Just above Inheritance Tax.

[Russethouse]

I guess the key word is 'solely' in using a room as an office. We divide our bills up and make a provable claim for the use of the room - I know lots of people who use much more imaginative figures though.

I'm surprised this is 'news' now though - I have known about the CGT changes, certainly regarding buy to let, for a while.

[I agree entirely]

I'd guess the tax authorities will take your word for it - that is if you have been claiming mortgage interest relief or other household expenses based on a percentage of your home's floor space they would demand the appropriate percentage of CGT. 

If you've never claimed anything or sought to offset any costs I wouldn't worry about the revenue chasing you.

How new this is I don't know.

[Russethouse]

Never claimed on the mortgage, only the electricity, phone , fraction of the water rates and community charge. Our accountant is as straight as a die and told me last year that the revenue are tightening up on this even more.

I think the 'buy to let' changes were in the last budget 

[Gluestick]

CGT has always been payable on the part of a principal home used for business purposes.

My practice has always advised clients along the lines RH suggests: never, ever charge any percentage for mortgage interest (the principal cannot of course be charged even where the property is a 100% business use asset), otherwise, charge a proportion of total annualised costs on the basis of "Per Room".

i.e. if your house has five living rooms and one is used exclusively for business purposes, then one fifth is normally acceptable.

You can charge repairs and renewals such as new carpets for common parts (e.g. hall) if clients use this to get to the office; and redecoration proportions.

 

[ams]

To avoid the "exclusively used" terms accountants use the term the bathroom effect. ie one uses bits of each room, so no part is exclusively used. Therefore no CGT liability.

 

ams

[Gluestick]

Whereupon if one charged ALL the costs of acquisition of the capital asset, then HMRC would simply use their usual pro rata yardstick and charge CGT based on the price of each percentage at acquisition away from the price realised on sale and charge CGT on the proportion applying to the whole property relative to business use.

Same with any other expensed item, such as cars.

Bearing in mid that HMRC enjoy extremely robust powers and will raise an assessment and thereafter leave it to the taxpayer to justfiy their position.

And if the Revenue feel it's a seminal matter, then they will run the case right through to the House of Lords: it's not their money!