Hello!

Name: Sean
Name: Sean Registered Posts: 18 Dedicated contributor 🌟 🐡 🌟
Hello,

I seem to have been registered with this forum for quite a while but I have never been on it!

Anyway, I have been lurking for the past week and wish I had said hello sooner because there seem to be a lot of advice available - so, hello!

I work in industry full-time as an accounts assistant to a management accountant but I also do part-time work (few hours a week) with a certified accountant doing mainly bookkeeping and a few VAT returns. Like many on here I hope to finish AAT and go self-employed but maybe get a few bookkeeping clients of my own to start with shortly.

Anyway, I was hoping someone could help me with a capital gains question that my plumber asked me this morning. He owns a second home - not in his name but his wifes - and they want to sell it. However, he doesn't want to pay capital gains tax if possible. He was saying he might move in to it for 12 months and then move out? I said that sounds too simple and that I'm certainly no expert but I will see what I can find out.

So does anyone have any ideas? I'm sure he can't completely negate capital gains, especially after the expenses scandals - but what's the best way to minimise what he will have to pay out in tax?

Thanks in advance.

Sean.

Comments

  • T.C.
    T.C. Registered, Tutor Posts: 1,448
    Not quite as simple as that. If he owns a second home then he is responsible for capital gains for the time it has been so. He could sell his main residence and move in 'permanently', but this would have to be quantified. In the past I had someone trying to do something similar with a house and a self-build. The tax enquiry decided capital gains was due and I really had to agree. Has the property been let out, because you could also be looking at tax due on income! If the house is in his wife's name and is her house, ie an inheritance, then it is her capital gains not his.
    I would suggest that you gather all the facts about the house, ownership, time owned, amount paid etc etc and then check out a tax guide. This will give you the basics. You can always come back on here then with some specific questions.
    Good luck.
  • Name: Sean
    Name: Sean Registered Posts: 18 Dedicated contributor 🌟 🐡 🌟
    Thanks, T.C

    I'll get some more details.

    I will have to come on here a lot more often - I find all this tax stuff quite interesting! Great way to learn!
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624
    It's also worth doing the calculations as you may find with the annual exemption that capital gains tax won't even be due in the first place negating the need for any further thoughts on it.
  • Name: Sean
    Name: Sean Registered Posts: 18 Dedicated contributor 🌟 🐡 🌟
    OK, I bought a tax guide - I had never actually thought of doing that and it all seemed pretty self explanatory.

    However, it also lead me to another question:

    Career wise, at the moment, the idea that excites me the most as far as the next step in my career is concerned is becoming an MIP and starting off by doing some bookkeeping work and getting out there and getting my own clients. Then, once I have some more experience and clients I have a business idea that I think might work.

    I am just under 3 years out of university (mature student - 28 years old now) and I have some good industry experience and also experience doing part-time bookkeeping/VAT returns at the weekends with a certified accountant. However, as much as I would love to be the kind of person that can do the corporate route and go and work in a big practice I'm just not that type of person. I just learn better when I'm left to figure out things for myself - it gives me more focus. I would love to start out part time and build from there whilst continuing my professional development by studying/reading books.

    I know this is not the typical career route to become an accountant - but I still want to be a professional and continue my own professional development. I certainly wouldn't take on work that I or the AAT wouldn't feel comfortable with me doing. I would prefer to have links with other accountants that I could possibly pass work to and learn from at the same time.

    Has anyone else taken a similar route like this? Has it worked out well? I would love to know peoples thoughts. Or maybe just copy and paste a link to a thread that has discussed this a million times already!

    Many thanks.

    Sean.
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 πŸŽ† 🐘 πŸŽ†
    However, as much as I would love to be the kind of person that can do the corporate route and go and work in a big practice I'm just not that type of person. I just learn better when I'm left to figure out things for myself - it gives me more focus. I would love to start out part time and build from there whilst continuing my professional development by studying/reading books.

    I know this is not the typical career route to become an accountant - but I still want to be a professional and continue my own professional development. I certainly wouldn't take on work that I or the AAT wouldn't feel comfortable with me doing. I would prefer to have links with other accountants that I could possibly pass work to and learn from at the same time.

    Has anyone else taken a similar route like this? Has it worked out well?

    That's me. I started off as a travelling bookkeeper/ work-from-home accountant and I am now one of 2 partners, and we have 3 members of staff in a high street office, so it does work :)

    Health problems make me unemployable (and I wouldn't last in a corporate environment anyway), so I had to go it alone. It's worked for me. It's a steep learning curve though - while I had enough experience to get my MIP licence, I don't feel I had enough practical experience to start my own practice initially, but I only found that out after jumping in the deep end (and at the time I didn't know any better).

    With hindsight, I would always advocate getting as much practice experience as you can. Having someone to ask/ bounce ideas off is essential. I think it's the clients who lose out if you don't have someone. As you say, you want links with other accountants. Forums like here, AWeb and UKBF really are invaluable especially to sole practitioners.

    Hope that helps.
  • Name: Sean
    Name: Sean Registered Posts: 18 Dedicated contributor 🌟 🐡 🌟
    That's brilliant - I'm so happy to hear I'm not the only one! It's so frustrating to think that I like doing accounts but get de-motivated by thinking I have to go the corporate route for at least 10 years first! I'm trying, but there comes a point where you realise it's just not for me.

    I'm thinking about getting some bookkeeping clients of my own and see how I do with that. Then if that goes well I might try and reduce my hours slightly at work so I can do more work with the certified accountant I know or maybe talk to some other accountants in the area to see if they could take someone on part-time? Do you think that sounds like an OK plan of some sort?
  • JodieR
    JodieR Registered Posts: 1,002
    Back to the initial question, I think I'm correct in saying that if the wife has ever lived in the house then the last 3 years of ownership will be 'deemed' to be occupied by her so depending on the length of ownership this can weight the pro-rata adjustment in her favour. If not then yes, if there's a plausible reason for them to live there for a year then this can potentially lead to a big tax saving, but of course there's more to consider than just how much CGT you'll save.
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 πŸŽ† 🐘 πŸŽ†
    I'm thinking about getting some bookkeeping clients of my own and see how I do with that. Then if that goes well I might try and reduce my hours slightly at work so I can do more work with the certified accountant I know or maybe talk to some other accountants in the area to see if they could take someone on part-time? Do you think that sounds like an OK plan of some sort?

    That sounds indeed like an OK plan!
    The trick is to get in gradually if you can and not take on anything you can't handle, while slowly building up your experience in various areas and, essentially, building links with other accountants. If that means subcontracting some work out at first (and checking your own work against it to see where you're going right/wrong) then that's an option.
Privacy Policy