Will I pay Capital Gains Tax or Income Tax?
Question I am employed full time, my partner is self-employed as a Limited Company. We have bought a property to renovate as a personal venture (rather than business). We bought for £75K, spent around £15K including costs, and will sell at £110K. Will our profit be subject to Capital Gains or Income Tax?
You do not state whether this property is your only or main residence, so I am assuming that it is not. In this case, you are undertaking a evelopment and hence are subject to income tax rather than CGT. This is a very complex area of tax law with a number of tax cases decided either way...if it is likely to be your only ever development then you could be treated as CGT, although technically you have started a trade of development. If either of you are connected to the building trade then it is definitely a trade.
Remember you should register as self employed within three months of commencement in order to avoid the £100 fine.
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