Question 5b
On 23 August 2007, Pere Jones made a gift of a house valued at £420,000 to his son, Phil Jones. This was a wedding gift when Phil got married.
Pere Jones
Pere died on 20 March 2013 aged 76, at which time his estate was valued at £880,000. Under the terms of his will, Pere divided his estate equally between his wife and his son, Phil. Pere had not made any gifts during his lifetime except for the gift of the house to Phil.
The nil rate band for the tax year 2007–08 is £300,000.
Phil Jones
Phil is aged 48. The house which he received as a wedding gift from Pere, his father, was always let out unfurnished until it was sold on 5 April 2013. The following income and outgoings relate to the property for the tax year 2012–13:
| £ | |
|---|---|
| Rent received | 22,000 |
| Sale proceeds | 504,000 |
| Cost of new boundary wall around the property (there was previously no boundary wall) | (5,300) |
| Cost of replacing the property’s chimney | (2,800) |
| Legal fees paid in connection with the disposal | (8,600) |
| Property insurance | (2,300) |
Phil has no other income or outgoings for the tax year 2012–13.
Required:
(b) Calculate Phil Jones’ income tax and capital gains tax liabilities for the tax year 2012–13. (7 marks)