Filling in tax return form for CGT section

[jonblair123]

Hello, please can someone give me the following information.

My daughter owned a house whilst at university. She had friends who rented rooms, which were under the rent a room scheme for 4 years. Subsequently, the house was rented out for 2 years whilst she did not live there. It has now been sold. Since it was her only residence, and the last 3years do not count, the proceeds are exempt from CGT. That is my understanding anyway.

The question is, when she fills in her tax return for 2006-2007 tax year, does she have to fill in the CGT section?

[Tax Accountant]

Hello, please can someone give me the following information.

My daughter owned a house whilst at university. She had friends who rented rooms, which were under the rent a room scheme for 4 years. Subsequently, the house was rented out for 2 years whilst she did not live there. It has now been sold. Since it was her only residence, and the last 3years do not count, the proceeds are exempt from CGT. That is my understanding anyway.

The question is, when she fills in her tax return for 2006-2007 tax year, does she have to fill in the CGT section?

(1) As far as I have been able to establish, only one room under rent a room scheme is allowed PPR exemption. Therefore, if more than one room was let, there may be restriction of PPR relief. You have to apportion the gain to the extra letting rooms on a just and reasonable basis. One suggestion is on the basis of total number of rooms in the house. However, I would think that any chargeable gain by reason of letting more than one room will be covered by letting relief, taper relief and annual exemption.

(2) Turning to the question posed, yes, she will need to report the gain because the house is a chargeable asset and the sale proceeds will be in excess of £35,200.

Ramnik

[jonblair123]

Thanks Ramnik. Not what I wanted to hear, but better get forms filled in right. Another complication is that my daughter went to Canada some two years ago, and has decided to settle there! I also understand that any capital gains are inapplicable if the tax payer is out of the country for 5 years.

Question is, does she have to fill in the CGT section as above, and any cgt that applies will be waived by virtue of filling in the Non Residence etc section?

Will she have to fill in the tax return for the next 5 years?
She has been filling it in purely because of the let property. She has no untaxed income in UK.

[Tax Accountant]

Thanks Ramnik. Not what I wanted to hear, but better get forms filled in right. Another complication is that my daughter went to Canada some two years ago, and has decided to settle there! I also understand that any capital gains are inapplicable if the tax payer is out of the country for 5 years.

Question is, does she have to fill in the CGT section as above, and any cgt that applies will be waived by virtue of filling in the Non Residence etc section?

Will she have to fill in the tax return for the next 5 years?
She has been filling it in purely because of the let property. She has no untaxed income in UK.

A tax return has to be completed if one is issued or if there is a UK liability which needs to be reported.

I suggest that she completes the non-resident pages and CGT pages and claim the PPR and letting exemptions as applicable. If there is any gains exposed to CGT, the non-resident status will cover that unless she returns to the UK before completing 5 tax years abroad.

If she has no other untaxed income from the UK, she should contact her tax office and ask them to remove her from the requirement to file tax returns.

Ramnik

[jonblair123]

Thanks for clarifying this point.

[Tax Accountant]

Thanks for clarifying this point.

You are welcome.

Ramnik