cgt on leased commercial property

[FAR884]

hi,
summery: commercial property owned by 2 (equal shares) leased to a limited 'trading company' which is also run (directors) by the property owners. property owned for over 2 years.

Q: would you kindly tell me what are the cgt implications upon sale of the property to a third party?

[Nigel Lord]

Each of the owners will be liable to CGT on their half share of the net gain computed as follows:

Proceeds (net of costs of sale)

Less:

Purchase price
Costs of acquisition
Improvement costs
Taper relief (if the company undertakes a trade this will be 75% of gain)
Capital losses arising in same tax year
Unused annual exemption (£7,900 to 5 April, £8,200 from 6 April)
Capital losses brought forward

= Taxable Gain

The net gain will be taxable at the owners marginal income tax rates (10%/20%/40%).

If you require assistance in computing the gain or mitigating/deferring the liability, please do not hesitate to contact me.

Nigel Lord
Lord Associates
Taxation & Business Consultants
Caxton House
Old Station Road
Loughton
Essex, IG10 4PE
020 8418 9101 & 07769 931852
mail@lordassociates.co.uk

[FAR884]

Thank you very much for your prompt response. Much appreciated.

Would you kindly expand on the 'taper relief' section. I am not sure I entirely understand that part.

Thanks again.

[Nigel Lord]

Taper relief reduces a chargeable gain depending on how long a chargeable asset has been held.

The most valuable form is Business Asset Taper Relief which reduces the net gain by 75% if the asset has been held for 2 full years.

If you have owned a commercial property for more than 2 years and throughout this time it has been used by a trading business, 75% Taper Relief may be available. It does not matter if the business is owned/managed by connected persons.

Nigel Lord

[FAR884]

Thank you very much Nigel. Well understood. Keep well.