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I pay 40% tax. My wife currently pays tax. We own a second…

Customer Question
I pay 40% tax. My wife...
I pay 40% tax.
My wife currently pays tax.
We own a second home and may want to sell.
The house is currently in my wife's name.

Should capital gains tax change and be payable at the person's max tax rate:
1) Would she pay tax on the gain at the minimum rate for all of the gain or would the tax be applied in line with the size of the gain.
2) If the house was jointly owned, would we be able to claim for 2 x CGT allowances, and then tax is applied to my wife as above.
Submitted: 8 years ago.Category: UK Tax
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Answered in 8 minutes by:
6/10/2010
UK Tax Professional: Tony Tax, Tax Consultant replied 8 years ago
Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 15,994
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hi.

1 If under any new CGT system the gain is to be added to the taxpayer's income as it was before 6 April 2008 then your wife may pay tax at her lowest tax rate on all the taxable gain or a combination of her lowest rate and her top rate depending on what income she has and the size of the gain. Currently, the first £6,475 of a taxpayer's income is tax free, the next £37,400 is taxed at 20% and anything else is taxed at 40% until the £150,000 level is reached and the 50% tax rate kicks in.

2 There is nothing to stop you putting the property into joint names to benefit from two annual CGT exemptions. However, you cannot allocate what is left to your wife. That would be a case of having your cake and eating it. You will pay tax on your share of the gain at whatever rate or rates of tax you pay.
Tony Tax
Tony Tax, Tax Consultant
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Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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Customer reply replied 8 years ago

You could assist in another aspect of the question.

If the house is in joint names, but any rental is paid into may wife's bank account, can I assume that she is liable to the tax.

UK Tax Professional: Tony Tax, Tax Consultant replied 8 years ago
If the property is in joint names, then the rental income is split on a 50:50 basis for tax purposes.

The only way that the income can be shown to be that of your wife is to keep the property in your wife's name alone.
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Customer reply replied 8 years ago

Tony,

the site stated I could query the initial question.

I'm assuming this is covered by the initial payment.

Regards,

Rod

 

UK Tax Professional: Tony Tax, Tax Consultant replied 8 years ago
Sure.

Many people ask follow up questions.
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