Personal Tax- Capital Gains and Property Time apportionment

personal-tax-capital-gains-time-apportionment

Personal Tax- Capital Gains and Property Time apportionment

17th January 2024

IRIS Personal Tax

IRIS Personal Tax- Capital Gains and UK/Foreign Property Income Time apportionment and Capital gain Annual Exemption

IRIS PT does not calculate time apportionment for Capital Assets or UK/Foreign Property.

Capital gain Annual Exemption is calculated against your total capital gains in the relevant year (For Example if you have a total CG gain in 2023/2024 it will then apply a maximum £6000 exemption, this will be shown on the Capital gain computation). The Exemption value cannot be time apportioned against a specific gain as its only applied to the total gain in that year. If a specific CG gain should be less/more due to time apportionment which changes the total CG profit then read below:

If a Capital Asset: you will need to manually calculate the gain and add the asset within the Other Capital Gains section with the gain as calculated. For Example (with these factors if relevant):
The calculation is:
(Disposal Proceeds – Incidental costs)
less
(Acquisition cost – Enhancement costs)
= Total gain multiplied by the time apportionment (number of days from eg 05/04/2015 to the disposal date/ number of of days from purchase date to the disposal date)
You can also add an additional note to HMRC. Capital Assets, Edit, Losses and Other info, Tick Additional information.

Further detail are available: https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-calculating-taxable-gain-or-loss#time-apportionment

If a UK/Foreign Property: Shared % of income over a period of time- The property is no longer a % split (or the split % has changed) between the parties in the current tax year and you need to represent the updated income for all parties. You have two options on which you find the best to work with:

1.Open the relevant property and remove the ‘joint property’ option and/or remove the % share options and manually calculate/apportion the clients income/expenses etc and enter it in PER client ensuring they all have the same property created for them (Note that PT will no longer automatically track/calculate the % split between the parties, you will need to keep track of changes etc). You can also add an additional note to HMRC. Reliefs, Misc, Additional information, SA100.

OR

2) If the % split has changed/ended part way through the year, then you can create it again as a 2nd property with same name etc – 1st property has the original % split and the 2nd duplicate property has the updated % split. You will need to manually apportion the income/expenses etc between the two properties. This has the benefit that PT will still automatically calculate the % split between the parties. You can also add an additional note to HMRC. Reliefs, Misc, Additional information, SA100 explaining its just 1 property and not 2. Note: the property pages may show as an additional 1 property total as well which your note will be explaining.