Sounding Out CGT on Property transferred to beneficaries from A&M Trust

[dp711893]

Hi All

Firstly, sorry for the essay/story but thought i'd put everything down in order to provide context. I need some help sounding out if my understanding is correct on the below.

An Accumulation & Maintenance Trust had an asset of a commerical property (containing a office unit and a flat under one roof). in 2016 one half of the trust was valued (namely property) at a cost of £460k. The original purchase price by the grandparents was £75K). It has been on rent from the trust to an organisation who has kept the property in good condition and actually spent 25K on refurbishment of the flat to be able to use it as office space).

As i said In 2016, half was vested to beneficary 1 as he turned 25 and hold over relief was applied. The Title deeds were adjusted to reflect his name. The valuation of his portion would have been 230K but this is not mentioned in offical copies of the deeds.

Since then the rent paid by the occupier has been split 50:50 between the trust and the 1st beneficary directly who has been declaring this as income from property rental on his SA; he is also a higher tax payer due to his normal job.

In Jan 2020, the property will be re-valued as the final beneficary will be recieve the remaining 50% of the asset. The valuation is coming in around the same plus/minus 20-30K, so for purposes of understanding, we'eve assumed it will be transferred when the whole property is valued at £480K. At that time, the trust will be no longer.

Each of the beneficaries also have their own individual flats and are renting these and living at home with parents.

the plan is that both beneficaries then sell this to the occupiers at approximately £600K.

Based on this, and Beneficary 1 being a higher rate tax payer and beneficary 2 being a lower rate payer based on their individual incomes, can someone confirm the following:

Original price purchased by trust 25 years ago was £75K plus some expenses (5K)
1.assuming sale of property by beneficaries for 600K, i work out in my simple terms, the following: Half x net gain of £262,500 (based on £600K-£75K), less 12,000 CGT allowance each, means each will have a CGT to declare on Self Assessment of YE2020 of 20% of £250,500 = £50,100.

a) i read from gov.uk that CGT is 18% / 28% for residential property but this is a commerical property and i read that this is charged at 20%, hence my calc at 20%.
b) I believe i can allow for the initial costs of original purchase. Is this correct?
c) when the beneficaries sell, can they allow for any other costs to reduce their net gain.
d) for Beneficary 2, the fact that he gets it in January and then in March will sell it - does that in anyway reduce / mitigate any element of CGT.

Talking and reading through various articles, is the above as simple as it sounds or is there specific CGT tax advice that one would benefit from by paying for the advice to actually gain anything.

David.

[AGoodman]

1 .Yes - it's 10% / 20 % depending on the level of other income
2. Yes - it is included in the beneficiaries' acquisition price on the holdover
3. Yes, sale costs such as legal fees
4. No