I have been asked the following by one of my self-employed clients and unsure of the answer:
I just wanted to ask a question about Capital Gains Tax. I own a flat that is currently let out and has been for many years which I am hoping to sell. The flat is currently only in my name but I was wondering if there would be any benefit to putting the property in joint ownership with my husband as I'm aware that each individual has a £10k allowance and was wondering if this means that effectively we would get a £20k allowance if in both our names?
Sorry if this may sound like a stupid question. Unsure what they mean by 10k allowance?, I would have thought that they would only be able to claim the allowance once.
Also from April my husband and I will become partners in the business - and am just wondering if we would need to submit a joint tax return or whether we would need to complete individual ones?
I am thinking that it would be a partnership tax return which can be done on HMRC, but this would be my first partnership client, so am new to this.
I do have a more experienced accountant person who helps me with more complicated stuff, but just looking for some pointers really.
As Nick has said, the property needs to be in joint names to benefit from CGT. Basically, you can gift property to a spouse/ civil partner or child that is not your main home without any real complication (as long as you are still living together). The £10K allowance is a bit like the tax free income you are allowed. Each person is allowed £10100 before they are taxed on any capital gains from the disposal of an asset.
I guess they mean a Partnership return as well but they still have to submit individual ones too but only for 2011-2012 onwards. Plus you need 3rd party software to submit a Partnership return online.
Bill
-- Edited by Wella on Saturday 19th of February 2011 04:37:41 PM
Sorry my earlier answer was short and sweet, was replying via my phone and the text ain't too big, so didn't want to put too much!
Bill's advice is spot on. The only thing I would add is; if you decide to put the property in joint names, don't do it the day before you get rid of it. Ideally, it should be 6 months or so before disposal.
It goes without saying that the transfer would only be worthwhile if the gain was in excess of £10,100 (and for the likely costs of transfer involved, way in excess).
