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Interactive Diagnostic

Stratford-upon-Avon

13 The Courtyard
Timothy's Bridge Road
Stratford-Upon-Avon
Warwickshire CV37 9NP

01789 294484

enquiries@gjassociates.co.uk

London

7-8 Stratford Place
Mayfair
London
W1C 1AY

0207 495 0304

enquiries@gjassociates.co.uk

CGT – Lettings relief

In general, there is no Capital Gains Tax (CGT) on a property which has been used as the main family residence. This relief from CGT is commonly known as Private Residence Relief or PRR. However, where part of the home has been let out the entitlement to relief may be affected. Homeowners that let out part of their house may not benefit from the full PRR but can benefit from letting relief. Since April 2020, letting relief has been restricted to homeowners who live in their property and partly rent it out.

The maximum amount of letting relief due is the lower of:

  • £40,000
  • the amount of PRR due
  • the same amount as the chargeable gain they made while letting out part of their home

Worked example:

  • You rent out a large bedroom to a tenant that comprises 10% of your home.
  • You sell the property, making a gain of £75,000.
  • You're entitled to PRR of £67,500 on the part used as your home (90% of the total £75,000 gain).
  • The remaining gain on the part of your home that's been let is £7,500.

The maximum letting relief due is £7,500 as this is the lower of:

  • £40,000
  • £67,500 (the PRR due)
  • £7,500 (the gain on the part of the property that's been let)

There's no Capital Gains Tax to pay – the gain of £75,000 is covered by the £67,500 PRR and the £7,500 letting relief.

You are not considered to be letting out your home if either:

  • you have a lodger who shares living space with you, or
  • your children or parents live with you and pay you rent or housekeeping.

Grenfell James Technology Adoption Index

How does your business perform against others adopting financial tech? Find out with our interactive diagnostic:

1.

How does your business receive invoices?

A)

Invoices are mainly received in paper form

B)

Invoices are mainly received by email

C)

Invoices are emailed then automatically forwarded to a designated mailbox

2.

How are purchase invoices processed?

A)

Invoices are entered manually

B)

Invoices are attached to manually raised invoices

C)

Automated software (e.g. ReceiptBank, 1Tap, HubDoc etc) collates invoices

3.

How are accounts processed?

A)

Using Excel/paper-based

B)

Using Computer-based, offline software

C)

Using cloud-based accountancy software

4.

How often is business data revised?

A)

Data is updated annually

B)

Data is updated quarterly

C)

Data is updated monthly or more often

5.

How is banking updated for your business?

A)

Banking is updated manually

B)

Banking is updated by imports

C)

Banking is updated via a live feed

6.

How are bank payments made?

A)

Bank payments are manual

B)

Bank payments are made using bulk imports

C)

Bank payments are made directly via accounting software

7.

How are bank receipts reconciled?

A)

Receipts are chased and reconciled manually

B)

Receipts are chased and reconciled automatically

C)

A third-party platform is used to chase debts and collect fees

8.

How often are management reports produced?

A)

No reports are provided

B)

Reports are provided but often too late to be valuable

C)

Reports are automated with real-time information

Score 8-12:

Curious Exploration

Your financial technology phase is Curious Exploration

% of respondent businesses are in this phase too.

Switching accountancy systems may seem like an upheaval, but can be much more straightforward than most businesses imagine. From talking to our clients, they have found moving from paper invoicing and desktop-based accounting software to the cloud and apps quickly makes the transition process a worthwhile investment of time. Digital accounting solutions bring in streamlined processes, up-to-date business data and greater confidence in the accuracy of information when making financial decisions.

Grenfell James works with your team to fully assess the needs of your business and minimise the impact of any transitions for solutions we recommend.

Find out more about App Advisory

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Score 13-19:

Measured Discovery

Your financial technology phase is Measured Discovery

% of respondent businesses are in this phase too.

Once cloud accountancy software is in place, there’s still plenty of scope to improve your accountancy processes and make sure your business is maximising the benefits of adopting a digital accounting solution. Grenfell James assesses each business to understand how any implemented solutions are being used, identify areas for improvement and the needs of the business overall to support your business goals and achieve success.

Our team of experts can discuss a range of time-saving automation and get different apps and cloud-based solutions talking to create and manage a digital accountancy eco-system to help your business grow.

Find out more about App Advisory

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Score 20-24:

Bold Innovation

Your financial technology phase is Bold Innovation

% of respondent businesses are in this phase too.

You know the benefits of accounting technology and the impact it can have on your business goals. If you want to take it a step further, our team can conduct a systematic review of your processes, apps and business goals to ensure your digital accountancy ecosystem is keeping pace with the changing needs of a growing business.