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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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.
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.