Angela Rayner is expected to claim that she was not required to pay capital gains when she sold her former council house after offsetting the tax with a kitchen renovation.
The deputy Labour leader is likely to argue that enhancements to the property, which she purchased under the “right-to-buy” scheme, meant that there was no tax liability.
Have to be a hell of a kitchen…..
Expensive tastes for a ‘simple working class girl’..
Took her a while to come up with that.
I understood that the cost of replacement fittings – like a new kitchen or bathroom – could NOT be counted against CGT. Only if it was a substantial change which added value eg extending the kitchen. Going to be tricky to make that argument if she’s only got £1k worth of receipts from Ikea.
Sounds rather desperate dunnit ?
I did this in Austria, but we nearly completely rebuilt our house. My solicitor could not get his head around this concept even when I got the tax office to explain it to him. Twat.
Hang on, since when could you claim renovation/decorative costs against personal, residential CGT?
Aren’t there pictures from the time of sale showing a pretty ordinary (a few steps above grotty) house and garden? Ie one that hadn’t had £48k splashed on it only a few years earlier?
Whereas the pics from the sale of her husbands house (where she never lived of course) showed a much more salubrious interior?
A very odd marriage it seems, the man lives in splendour with his wife’s brother, while his wife lives alone in a grotty house round the corner.
No, there’s no capital gains tax to pay as it was her sole non-CGT-encumbered property. There’s no CGT to pay on selling your primary residence, you don’t lose that non-encumberance by moving out to live somewhere else – that’s the entire point of moving out to live somewhere else – DISPOSING OF THE PREVIOUS PROPERTY!
This happens hundreds of thousands of time every year, it’s the natural process of household formation. Person buys property as their residence, it becomes a non-GPT property. They move out to live with somebody else, they sell the prior property, IT IS STILL A NON-CGT PROPERTY! Why is she making this so complicated?
If the government wants things to be different, the government must specificially legislate to specify that people coupling up have to pay capital gains tax, or just plain simply abolish exempt status for personal homes and make it unaffordable to ever move house again ever.
“jgh
No, there’s no capital gains tax to pay as it was her sole non-CGT-encumbered property. There’s no CGT to pay on selling your primary residence, you don’t lose that non-encumberance by moving out to live somewhere else – that’s the entire point of moving out to live somewhere else – DISPOSING OF THE PREVIOUS PROPERTY!”
Except that she got married and her husband also had a property and for CGT purposes, a married couple can only have one residence for private residence relief purposes. They should have jointly elected which one was to be the private residence.
“If the government wants things to be different, the government must specificially legislate…”
They did. s222 TCGA 1992.
“Recusant
Hang on, since when could you claim renovation/decorative costs against personal, residential CGT?”
Possibly. S38(1)(b) TCGA 1992 and see HMRC’s comments in their internal CGT manual at para CG15201.
Could be considered ‘enhancement’ expenditure.
“This happens hundreds of thousands of time every year, it’s the natural process of household formation. Person buys property as their residence, it becomes a non-GPT property. They move out to live with somebody else, they sell the prior property, IT IS STILL A NON-CGT PROPERTY!”
Only for 9 months after you move out does it remain your PPR. If you buy a house, live in it for a bit, then get married and move out to live with your spouse you have 9 months to sell the house and still gain full PPR. If you go over the 9 months (as Rayner did, she sold it years after she moved out) then the CGT due will be apportioned proportionally as to how many months she lived there and how many she didn’t. So if she lived there for 2 years then moved out and sold it 3 years later 60% of the gain would attract CGT.
I know this as my mother is going through exactly this at the moment – she moved out of her house of many years into a smaller one, but the old one has yet to be sold, over a year later. So there will be some tax due on the last 15 months or so of her ownership but not residence. Given she has lived there for over 35 years it won’t be too much.
Jim
“If you buy a house, live in it for a bit, then get married and move out to live with your spouse you have 9 months to sell the house and still gain full PPR.”
Not quite. A married couple can only have one residence but you could elect that the one you moved out of remained your PPR – although only if you COULD live there so if it was rented out you couldn’t elect that the one you moved out of remained the PPR.
But if (say) one new spouse lived in a country cottage and the other a town flat, they could move in together in the flat and provided the cottage wasn’t let, could elect that the cottage remained the PPR. Then CGT starts accruing on the flat.
“But if (say) one new spouse lived in a country cottage and the other a town flat, they could move in together in the flat and provided the cottage wasn’t let, could elect that the cottage remained the PPR. Then CGT starts accruing on the flat.”
But only one of them could do that, not both, on different properties? So in effect a married couple is one person not two, so they can’t both have a PPR? As a couple they have to choose which property it’s going to be? Unless they actually live apart of course.
@Jim
The election has to be a joint one so they’d have to agree which one was to be the PPR. In effect, yes, a married couple is treated as one person for PPR. Nor could they claim they were ‘living apart’ and try to get two PPRs that way. If they were genuinely separating it might be possible but you couldn’t have a married couple just choosing to live separately to gain two PPRs.
How would HMRC know the difference if they were ‘genuinely separating’ and then ‘reconciled’ a few years later to try and get some extra PPR? Good question and I know it’s been tried. HMRC are of course sceptical of such claims. It would be for the couple to prove their claim.
I looked up houses sold in that street on Rightmove (slow day) and they’re basic little terraces. A new kitchen is never going to add significant value even if you somehow manage to convince HMRC it was an ‘enhancement’ not maintenance.
I suspect, as someone suggested on another thread, this is just a way to string it out until after the election, whereupon the authorities will mysteriously lose interest.
And of course we now have the distraction of another Tory MP in the shit.
https://www.telegraph.co.uk/politics/2024/04/17/mark-menzies-tory-mp-investigation-campaign-funds/
Fingers in the till, including using party funds to repay a staff member who sprung him from being imprisoned in some rent boy’s flat.
The MP is also said to have made a late-night call to his former campaign manager one day in December, claiming that he was locked in a flat and needed £5,000 as a matter of “life and death”
WTAF? Where do they find these fucking morons?
There’s 18 ‘whipless’ MPs on the public teat at the moment, pushed out of their party for everything from rape allegations to sharing classifed information on tinder.
https://order-order.com/2024/04/18/rayner-claims-kitchen-renovation-offset-all-of-her-tax-liability/
Very well played Guido for coming up with this photo of the underwhelming post-renovation kitchen.
Christ only knows what it must have looked like before.
@John
I’d been considering a renovation of my kitchen but if that’s all you get for £23,000, I’ll not bother…..
I’ve searched Murphy’s blog and can find no reference to or comment on Rayner’s tax position
“WTAF? Where do they find these fucking morons?”
Straight out of the WEF supply bin. All they want is place holders. People who will do as they are told. Probably helps to have a few skeletons in the closet (arf arf) so that they can be kept in line more easily.
If that kitchen cost 23k she’ll have the invoices to prove it won’t she? Without invoices its just her word…..
Anyway does a kitchen refurb count against CGT? Even if you argue some of it is an ‘improvement’, a large proportion of it would have to be the cost of replacing the existing one, so there is no improvement on that expenditure.
It will be interesting to see what HMRC say. If kitchen refurbs (and presumably bathrooms and any other part of the house) suddenly count against CGT then it’ll be the same for everyone won’t it?
Maybe it’s a bit like Agent X-20 house
https://www.dailymotion.com/video/x8ep8aa
at 07:00
“ Angela Rayner is expected to claim that …..”
They’re flying a kite to see if they can get away with t.
“BraveFart
I’ve searched Murphy’s blog and can find no reference to or comment on Rayner’s tax position”
1) You would if she was a Jew.
or
2) To comment, he’d have to understand the rules.
Very well played Guido for coming up with this photo of the underwhelming post-renovation kitchen.
“It also raises another question. Does anyone else wonder where the supposedly “lowly paid care worker” supposedly got this £23,000 to spend?”
Opens another can of worms. 23K is above the UK gift tax allowance
And if it’s of any interest, i couldn’t make the kitchen pictured any more than 10K including appliances tiling etc if I tried. The unit fronts are bottom of the range economy. Back then, buy the lot for under a monkey. We put in dozens of them.
BiS
Perhaps her brother was sufficient of a DIYer to fit an extremely modest kitchen in lieu of paying rent.
That would be a tempting scenario with a view to maximising her tax-free windfall when selling the ex-council property (which she had of course been living in ever since acquiring it at a substantial discount as required by law in order to qualify for said discount).
Incidentally the fact that Labour are now flying the “she paid for sufficient improvements to cover the gain” kite suggests that her original “it was always my principal residence” argument was complete bollocks – and they know it.
I read that as “the UK grift tax allowance”. 😛
If the bampot really did take years’n’years to get around to disposing of the property, then yes you’re right, she was running down the CGT exemption. Give ‘er 1/7th per year off for seven years and call it quits.
To me it looks like huge lack of confidence in her marriage and a protected escape route. If you were really committing to moving in with somebody and wanted to keep external assets, you’d properly account for it. Either merge it into joint assets, or sort-a “sell it to myself” if you wanted to keep it out of the clutches of hubby. Or just blooming well get rid of the damn thing and stick the money in the bank.
But “oh, woe, my poor female brain couldn’t manage….”
It would be hugely ironic if the fall-out from this is a Labour government (Kinnock-voce: a LABOUR government!) strengthening marriage-based tax benefits after all they’ve done to destroy the concept of marriage.
@jgh
She was running down the RTB discount recovery period.
Is there any chance that kitchen was fitted by the Council when still under their ownership before the sale to Angela?
A sleuth could pull up right move photos of the adjacent properties to see if they had the same or similar kitchens at point of sale.
Distraction, Caledonian edition:
Peter Murrell, the former Scottish National party chief executive and husband of the former first minister Nicola Sturgeon, has been rearrested in connection with Police Scotland’s investigation into the party’s finances.
Andrew C
“Could be considered enhancement expenditure”.
I agree, it could be. “Could be” though does not make for “watertight” tax advice. That’s the part I truly don’t believe, unless she got her advice firm Richard Murphy.
And I wonder if CGT is here primary problem. If she got that house under right to buy and then didn’t live there but rented it out instead… could dwarf the CGT issue, not to mention it’s could be outright fraud.
This is a fair summary of the issue: https://www.newstatesman.com/politics/2024/04/i-looked-into-angela-rayners-tax-affairs-heres-what-i-found
It looks like a simple misunderstanding of the rules by someone who didn’t take advice at the time. If only £3,500 of tax is at stake I am not too bothered. Compare this to Nadhim Zahawi who avoided millions by using an aggressive tax avoidance scheme, lied about it, and used lawyers to threaten journalists who wrote about it.
Murphy’s lack of comment indicates he is hoping for a job. For the same reason he never wrote about the Miliband brothers inheritance tax planning. I can’t see Labour giving a job to someone who Corbyn and McDonnell thought was batshit crazy.
If I was a betting man I’d have called that wrong.
I think anyone anal enough has worked out that Angela’s house was the four score at
https://www.rightmove.co.uk/house-prices/sk3-8hl.html
Based on the nearest even numbered properties, that kitchen has been remodelled with the original sink being where the washing machine and dishwasher now are, and it’s since been moved to the back. Imo of course.
Just a % of Maggie’s Right To Buy discount to hand back then, which a good socialist should be happy to do. Alas, i think there’s a time statute on that.
The McStasi charge Sturgeon’s husband! Wahoo!
https://www.theguardian.com/uk-news/2024/apr/18/former-snp-chief-executive-peter-murrell-charged-over-embezzlement-husband-nicola-sturgeon
Compare this to Nadhim Zahawi who avoided millions by using an aggressive tax avoidance scheme
Tax avoidance and tax evasion are rather different things. One is a crime, for example.
I understood that the cost of replacement fittings – like a new kitchen or bathroom – could NOT be counted against CGT. Only if it was a substantial change which added value eg extending the kitchen. Going to be tricky to make that argument if she’s only got £1k worth of receipts from Ikea
It would have been tax deductible if it was a rental property and she was landlady…and someone was renting it…like maybe her brother
@Jim: ’If that kitchen cost 23k she’ll have the invoices to prove it won’t she?’
I’m sure the SNP have a shredder they aren’t using anymore that she could borrow….
I think the labour party has it now, her membership records from the time have gone through it.
…if it was a rental property…
I’m not sure on that, but the rules did change a few years ago. I had a note in my spreadsheet for a few years reminding me not to put figures in a certain box.
From being in the rental trade for only 27 years, refurbishing a kitchen is not a capital expense, it’s a running cost. Putting in a kitchen where none previously exists is a capital expense.
Examples: installing central heating where none previously exists. Installing inside toilets where none previously exists. Installing a shower where none previously exists.
Not-examples: Replacing the roof – that’s replacement, wear’n’tear, etc. Replacing carpets, redecorating, etc. replacing windows – ditto.
Marginal, get advice: replacing single glazed windows with double glazed. There’s margins where part of it is wear’n’tear replacement and part is capital spend on new features. From memory I was allowed 50% assignment as capital expenditure, but then I’m not in this business to sell, but to rent.