Practical Query: Entrepreneurs and PPR Reliefs

Practical Query: Entrepreneurs and PPR Reliefs

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I have a client with one furnished holiday let, satisfying all HMRC requirements for a number of years.

The letting has just ceased and the property is to be used as his PPR (current home/business property is being sold on sudden retirement).

Because of failing health I anticipate there will be a further move in the next three years.

On that sale (obviouly subject to changes to legislation) I believe that entrepreneurs relief could be claimed on the full gain as a material disposal of a business asset - but that he will also be eligible for some PPR relief.

Could anyone advise how these interact computationally. For example is the last 18 months tax free and the balance taxed at 10% or is there a legislative quirk whereby introducing PPR will result in an element taxable at 18% or 28%.

Thanks for any help

Replies (4)

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By michaelblake
14th Oct 2014 15:26

The other way around

You would calculate and deduct the CGT private residence relief first and then in principle since there are no apportionment provisions within Sections 169H-S dealing with periods of business use and non business use (apart from those at Section 169P that apply to associated disposals) you would claim entrepreneurs relief on the whole of the gain remaining after deducting private residence relief.

 

It is not known whether HMRC accept that approach but there is nothing in the legislation to prevent it.  

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By mommaB
20th Oct 2014 11:43

Many thanks

Thanks Michael.

I couldn't see any quirks in the legislation that would lead to issues like we used to have with the interaction of PPR and BATR and appreciate the time you have given to reassure - it appears that no-one disagrees with you either, which is even better.

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By Steve Kesby
20th Oct 2014 11:56

I agree with Michael

Because it is a material disposal, there is no apportionment, so the part of the gain that remains a chargeable gain after giving PPR qualifies for ER.

If it had been an associated disposal there would be a just and reasonable restriction on the amount of gain qualifying for ER, but, based on the decision in Jefferies, that too should have left the full chargeable part of the gain as qualifying.

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By mommaB
21st Oct 2014 15:02

Consenus!

Thanks Steve

Consensus definitely trumps a simple lack of disagreement!

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