Is this a business for CGT relief?

Is this a business for CGT relief?

Didn't find your answer?

I have a client who owns land that he tarmacced, put up portakabins on and has been renting out to a car dealership for the past 5 years or so. He has now been offered money for this site. I have been putting the income on the Tax Return as rental income, but as it is land rented to a business, can it be called a business asset for the new CGT? i.e. will the gain be taxed at 18% or can he get the new enterpreneurs relief and the gain taxed at 10%? Or will the entire gain be taxable onto own personal income with only the annual exemption?

CGT not my strong point so any help greatly appreciated.
michele sutcliffe

Replies (1)

Please login or register to join the discussion.

avatar
By User deleted
13th Feb 2008 16:28

Time perhaps of the essence
I frankly cannot see this activity as a trade and think you ought to put entrepreneurs relief out of your mind. Yes, the asset should qualify for BATR but as to whether 100% of the potential gain does, one cannot say because the full history of the land is not detailed.
If the five years mentioned constitutes the whole period of ownership, an exchange of unconditional contracts pre-6/4/08 is indicated - if practical.
From 6 April, the gain net of annual exemption will be charged at 18%. whatever the client' s income. At present, the latter does come into the frame so , before taper relief, you could be looking possibly at a 20% as well as a 40% rate.
To be on the safe side, calculations should be made if, for example, the land has been owned for over 10 years, and, for the five years preceding letting to the car dealership, it did not qualify for BATR-- just the non-generous "ordinary" taper.

Thanks (0)