Capital Gains tax

[shilu-patel@talk21.c]

Capital Gains Tax

On 10 April 2003 I relocated the business to a larger pr3emises costing £180000. On the same date I also sold my previous business premises for £110000 making an indexed gain of £53000. These premises had been purchased on 2 January 1997.

Your advice, along with computations to help understand is sought on these points:

Can rollover relief be claimed for the gain made in April 2003? If this is possible what will be the tax effect on a future sale at a profit of the new business premises?

How much capital gain tax would I have to pay if rollover relief was not (or could not) be claimed? I have unused capital losses brought forward from earlier tax years of £20000.

Both of the above premises are fully owned by myself.

[Huw Williams]

From what you have said, rollover relief should be available as you are moving business premises. Claiming the relief will mean that the cost for (Capital Gains Tax) CGT purposes of your new premises will be reduced by the gain on the old one.

But this is not the whole story because there is also taper relief which is calculated after the deduction of your losses.

Assuming full taper of 75%, you will only be taxable on £8,250 of gain (25% of £53k less £20k losses).

If you roll the gain over, you lose all the taper relief and need to own the new property for long enough to qualify for full taper on it (ie to later in April 2005).

So the choice is a little tax now or - well it depends on what you expect to happen in the future.

This looks like a question which would need a meeting to go through all the issues that arise in your circumstances.

Huw Williams
217 Musters Road
West Bridgford
Nottingham
NG2 7DT

0115 914 6846

enquiries@huwwilliams.co.uk