Capital gains tax - how does it work then?

[threeleftfeet]

Supposing I owned a house for 14 years.
Say I bought it for £100K and sold it for £200K.

I live in it for 10 years and then rented it out for 4 years.
(Not real figures, but trying to make this easy!)

How would they work out the CGT?

If I understand it correctly, I wouldn't pay CGT for the 10 years I lived there, nor for the last 3 years I rented it out. So I would have to pay CGT relating to one year.

That's where my knowledge runs out! How doe they work that out? And how would it relate to the profit the house had made?

If anyone could shed some light on this I'd be very grateful!

hopeful bump :)

The taxable amount would be one fourteenth based on your description - you don't need to try and figure out values for the year that doesn't qualify for the exemption.

I suggest you look on HMRC's website to calculate the gain accurately, there are some good help sheets there. You will also get an annual exemption for CGT so the first c.£10k of the bit that's taxable is deducted before tax of 18 or 28 per cent is applied.

I am in similar circumstances. I spoke to the I.R about this and they told me the following:

Last 36 months are treated as though you lived in the property, so in your case 13 years are exempt for 'Private residence'.

24 months can also be exempt due to 'Lettings Relief'.

So you may be completely exempt. Your best bet is to give the I.R a quick call they will help you.

HMRC help sheet.

If you have lived in it for the vast majority of the time the letting relief will probably cancel out the proportional gain (as other posters have mentioned how to calculate).

You have to submit a tax return and include the calculation on the land and property additional sheets. It's a bit fiddle but easily do-able if you use the guidance sheets. You need to submit the sheets even if the calculation shows you owe nothing.