Well, it’s that time of year again when I do my tax return.
Actually, it’s worth noting that there is some confusion around, concerning when the deadline is. For the UK tax year that ended in April 2006.
- We have to put in our tax returns by 31st January 2007
- If we put in our tax returns by 30th September 2006, then HMRC guarantee to work calculate our tax liability in time for the payment dealine
- The payment deadline is 31st January 2007
If, as we did last year, we miss the 30th September deadline, then the HMRC will still calculate our liability (basically, as an when they get round to it.) Last year, we were in about the end of October, and the calculation came through early December – in plenty of time.
The risk of missing the deadline is that, if we mis-calculate, we might end up either over-paying (and having poorer cashflow until the refund comes through) or under-paying (and have to pay back the missing amount plus interest.)
Anyway, back to the plot. Late in 2005, I sold a flat I’d bought in 1994, and in which I’d lived for a while (then I got engaged, and Mary and I bought a house together, and started letting out my flat.)
Calculating the CGT payable was going to be a nightmare, because I needed to take into account:
– Indexation relief
– Taper relief
– PPR relief
– Private letting relief
Bit of a nightmare trying to work it out myself, then I bumped into Nick Braun from the TaxCafe at the Property Investor Show, and looked at the Property Capital Gains Tax Calculator they sell, written by Carl Bayley.
I have a lot of time for Carl – the man is a good accountant, a good public speaker, and a good writer, and I’ve been recommending his book How To Avoid Property Tax for a while.
Property Capital Gains Tax Calculator isn’t a book – it’s an addon that works with Microsoft Excel. It basically does exactly what it says on the tin and calculates the tax I owe, but makes sure I pay no more than I need to.
If you have to sell a property, then £30 spent on this will save a lot of time effort, and worry about whether you’d got it right.