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BPR 50% to 100% - property on partnership balance

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I have a husband and wife trading partnership running a B&B. The trading premises are currently outside the partnership accounts and I am keen to get them on to the balance sheet to avoid 50% BPR and secure 100% BPR. (The property is held jointly and the profits have always been split equally. )

There are borrowings of aprox £200k and my question is am I right in saying there is no CGT or SDLT chargeable upon a move to balance sheet?  Is it as simple as including them in the accounts at current market value? Do we need to have a legal document indicating the transfer?

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Psycho
By Wilson Philips
11th Nov 2019 17:06

Scottish or English partnership?

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By The Dullard
11th Nov 2019 17:26

What difference does it make please?

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Psycho
By Wilson Philips
11th Nov 2019 17:55

None to the tax, but possibly some to the legal paperwork.

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By MJShone
12th Nov 2019 09:11

I'd get a solicitor to draw up the appropriate paperwork. You're right about the CGT and SDLT - but watch out for an SDLT trap in para 17A of Sch 15 to the FA2003.

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By The Dullard
12th Nov 2019 10:31

Is the property in England or Northern Ireland? Or is it in Wales or Scotland?

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By Tax Dragon
12th Nov 2019 10:50

Oh, the joys of ever looser union.

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By david_curtis
12th Nov 2019 11:15

Thank you for your replies, the property, trade and partnership all in England.

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By The Dullard
12th Nov 2019 12:49

What MJShone said. But I think you only get 50% BPR on the interest in the partnership to the extent that the value is represented by the building transferred on any IHT event within 2 years of the transfer.

That's certainly the case if you transfer premises into a limited company, because I looked at it a while back.

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By Tax Dragon
12th Nov 2019 12:54

If we're answering questions that haven't been asked...

I would agree that, if BPR is due, the rate would be at 100% (immediately) post transfer. HMRC has a history of disputing property-related relief though. I know that because Justin points out every time they lose a property-related case.

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Replying to Tax Dragon:
Psycho
By Wilson Philips
12th Nov 2019 13:05

Tax Dragon wrote:

I know that because Justin points out every time they lose a property-related case.


"property-related" is redundant.
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Replying to The Dullard:
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By MJShone
12th Nov 2019 13:24

You get 100% BPR straight away. It's a question of how long the business has been going, not how long it's owned a particular asset. You get the BPR on the value of the business, not on the value of each individual asset. (Though the value of the assets often contributes to the value of the business.)

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By The Dullard
12th Nov 2019 13:36

Yes. I think that I've misremembered the point.

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By Tax Dragon
12th Nov 2019 13:37

Oh. I misread The Dullard's comment. I agree with my misreading (which is why my comment above would appear self-contradictory)... and therefore with you.

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By The Dullard
12th Nov 2019 14:03

You possibly didn't misread it. I started to say that it wouldn't get 100% relief straight away, and then changed it to only getting 50% relief initially, but I forgot to remove the "not". And then I was actually incorrect, in any event, having confused myself over what the issue had been in the situation I'd encountered.

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By Tax Dragon
12th Nov 2019 14:21

Ah... thank you.

For fessing up I mean. That makes sense. I saw and agreed with the "not" before you removed it :-)

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