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Where Taxpayers and Advisers Meet
Capital Allowances and CGT
We are proposing to develop part of our business premises (currently unuseable) and anticipate that the development will give rise to a capital gain when we eventually retire and sell the premises. We are a partnership and wish to transfer into/sell the property to a limited company. The plan (as advised by our accountant) is: (i) exchange contracts on the sale of the property; (ii) refurbish the property between sale and completion; (iii) complete on the sale after refurbishment. The company would realise the gain. The question we have is: would we (as the partnership) still be able to claim Capital Allowances on the relevant parts of the refurbishment costs? Any thoughts would be appreciated
Re: Capital Allowances and CGT
No. You're asking "Can we get tax relief on the COSTS of refurbishment"? (Not Capital Allowances)
Why structure it this way?
Why structure it this way?
With a pinch of salt take what I say, but don't exceed your RDA
Re: Capital Allowances and CGT
It does seem to be an odd arrangement, why does the cost become allowable in a limited company but not in the partnership.
You would also sacrifice the ER which would currently be available but would not if you follow this path.
There are avoidance mechanisms which may suit your circumstances involving the formation of an LLP.
You would also sacrifice the ER which would currently be available but would not if you follow this path.
There are avoidance mechanisms which may suit your circumstances involving the formation of an LLP.
Re: Capital Allowances and CGT
In order for the partnership to claim capital allowances on fixtures in the property, it must have a 'relevant interest' (s176 CAA). It would appear that the relevant interest will be owned by the company at the time of the refurb. So the partnership would not be able to claim CAs.
