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On 19 April 2022, Simon purchased a derelict freehold house for £127,000. Legal fees of £1,800 were paid in respect of the purchase.
Simon then renovated the house at a cost of £50,000, with the renovation being completed on 6 August 2022. He immediately put the house up for sale, and it was sold on 27 August2022 for£260,000. Legal fees of £2,600 were paid in respect of the sale.
Simon financed the transaction by a bank loan of £150,000 that was taken out on 19 April 2022 at an annual interest rate of 6%. The bank loan was repaid on28August2022.Simon had no other income or capital gains for the tax year2022/23except as indicated above.
calculate simon’s income tax liabilities and his class 2 and class 4 national insurance contributions for the tax year 2022/2023,if he is treated as carrying on a trade in respect of the disposal of he freehold house.
