Help! We have lost our receipts…
Capital Gains Tax » May 31, 2024
We will be publishing some of the most frequent questions we have received and our answers to them. Please note we have changed some parts of the questions to protect client’s information. You should always seek professional tax advice before taking any action.
Question: We are getting in touch because we are going through a divorce and are going to sell one of our investment properties. We bought it over 15 years ago and we have spent roughly £50-60k on improving the property over the years (with new bathrooms, adding decking to the gardens, roof replacement, etc). The problem is we haven’t kept any of the receipts. I think if we looked really hard we could find maybe 20% of the receipts. Will the expenses we claim be limited to £10k?
Answer: When you sell a property the gain is worked out by taking the sale price less all allowable expenses. These include the purchase price, costs of sale, costs of acquisition etc.
Capital improvements to a property are also allowable expenses. When you submit your tax return to HMRC, they will not ask for any proof at that time. However, you are required to have proof of the work undertaken for all capital expenses claimed.
If you no longer have invoices or receipts, you may need to look at other ways to prove the work was undertaken.
What can we do?
Here are some examples of options you can try:
- Do you have before and after photos of the work? This might be evidenced through estate agents before the property was bought and photos now
- Do you have bank statements that show the expenses?
- You could also consider reaching out to the people who undertook the work to ask if they can re-issue your invoices.
If you do all of the above and can still only evidence 10% of the costs, I would suggest itemising what you can (eg roof labour £1,200, roof supplies £3,000) and note down which expenses you can evidence.
It would be a risk to claim expenses which you cannot appropriately evidence and if HMRC conduct an investigation you could face penalties.
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