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Not unless indexation is banked with an interspouse transfer.
Indexation otherwise is, like taper, lost come 6 April 2008
Points for clarification
Holiday cottage v. furnished holiday let
I can see that I should have called the holiday cottage a "second home" in order to distinguish it from a furnished holiday letting business. My apologies for any confusion.
If you are considering the treatment of furnished holiday letting businesses, then look at the business asset example, as this type of asset qualifies for entrepreneur's relief. This leads me to wonder what the situation will be whereby a number of furnished holiday lets are owned and the owner decides to wind down over a period of years and sells them off piecemeal - perhaps they are jointly owned and this also enables the annual exempt bands to be maxed out over a period of years. One assume that selling part of the business will qualify for the relief, or maybe it will not and it could then be more akin to the previous retirement relief. We will have to wait and see on that point.
EMI: Yes, a very good point, but then again, as you say EMIs are planned around exit strategies and by obtaining the capital treatment once still avoids NI on what might otherwise be employment related securities.
Winners?
In regard to winners example , I thought furnished holiday lets were treated as a trade and would therefore qualify for full BATR?
EMI Optionholders - losers
Nichola
Useful thought on exercise of EMI options or other options, understand from HMRC that there is NO present intention to provide access to the Entrepreneurs Relief based on the date of the grant of the options (as with taper relief which accrued from date of grant). Therefore to benefit from the Entrepreneurs Relief, options would need to be exercised at least 12 months prior to a disposal; ie the shares must be held and the remaining presecribed conditions met for 12 months.
Therefore seems likely that most of the gains arising on the sales of shares derived from the exercise of options under EMI schemes are likely to be taxed at 18% simply because the majority of EMI schemes are established as exit schemes (ie the option holders can only exercise in the event of a sale - subject to the 10 year backstop date).
Any one got any useful comments to add on this as I think we will now spend a lot of time explaining to those who have set up schemes why employees with more than 5% will still get taxed at 18%.
Mike Bell.
Thanks for the input.
I shall put up an ex-rental commercial property example later today (I happen to be just checking a comp as it goes).
Re. the 31.3.82 cottage example, I was trying to show that the March 82 value would be set automatically, so showed what if no rebasing election was made. With hindsight not the best illustration.
Business Relief
What is the difference between an "entrepreneur" who spends 25 years building up a business which she then sells for £2m and an person in an average job who saves and shrewdly invests, maybe in shares, art, property etc over 25 years and then sells all that for £2m? Capital is capital after all.
Some people might go on about the "sacrifices" the entrepreneur has made, maybe taking reduced remuneration over the years to build up the business or maybe working longer hours but surely this is flawed reasoning. The entrepreneur is making a large "Capital Gain" on the sale of the business as a result of their employment/self-employment and so maybe this gain should be taxed as income tax?
The point (I think) I am making is that in the current and previous CGT regime's fairness has always been an irrelevance, it has been used as a tool of Economic Policy, it being believed that it would encourage the development and growth of new businesses. Other economists might equally have believed that giving more incentives to the accumulation of "capital" by non-entrepreneurs might have increased the historically low savings ratio and had a desirable effect on the economy. Has it been shown that entrepreneurs become such due to the CGT breaks?
Winner example 2 - 31 March value
Useful at-a-glance examples, thanks.
But wouldn't the holiday cottage bought in 1981 have used the 31 March 1982 value in the current regime (or a comp comparing the two and the lower gain taken, unless a rebasing election had been made)? Principle is still the same just the decrease in tax is a bit less.
Roy, I agree
You seem to be the first person who has said what I have been thinking.
My fairly recently acquired client, owner of a hotel, run years ago by client & spouse, then over intervening years, (ie the periods when "business assets" were variously defined), by variety of tenants, some trading as Ltd Cos & some not. Trying to put a handle on that in time to give her advice on whether to sell pre 6.4.08 - I think I might as well give up.
I had hoped that the rumoured relief might somehow have been a transition from taper relief but no, as owner of commercial premises she just loses out.
Losers
Correct me if I'm wrong but it seems to me that people holding commercial property let to a qualifying company of which they are not shareholders or officers will be amongst the most adversely affected due to the withdrawal of BATR. (Similarly prejudiced if property let to a qualifying trader.)