A client was referred to us, concerned about a significant tax problem. He had an undeclared capital gain on the sale of a let property, overlooked as a result of a family bereavement. He estimated the gain at approximately £200,000, and was concerned about a potential capital gains tax liability of around £54K.
One of our Tax Advisers pieced together all the details, delving back into the history of the property, and found out that it used to be the client’s main residence, before being let out.
Our first step was to reassure on the CGT front – due to the interaction of the complex Principal Private Residence and Lettings Relief rules, there was in fact no chargeable gain.
As part of this exercise, we reviewed the tax returns for previous years to ensure that rental income had been correctly declared. No problems on that front, but we noticed that higher rate income tax relief hadn't been claimed on pension contributions. After claiming for 3 years, we arranged an income tax repayment of £9,000.
The Springfords Tax Adviser now prepares tax returns on an annual basis, and meets with the client at least once a year to discuss what’s been happening and whether any tax issues need to be considered. Tax worries are a thing of the past!