Business Asset Disposal Relief (BADR)

Business Asset Disposal Relief (BADR) & Rental

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Whether BADR can be obtained in the following scenario?

  • Husband and Wife bought a commercial property (ice cream shop) and let it out to their limited company which is engaged in ice cream selling business.
  • The couple charges rental to the limited company that would cover their mortgage cost only.
  • The couple sold the Jointly owned property after 7 years.
  • Their limited company is in existence but remained dormant on account of non filing of accounts.

Replies (3)

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By David Ex
15th Jan 2024 09:05

Have a read of the guidance and legislation and let us know what you think.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg63950

Failing that, maybe discuss with your accountant.

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By Duggimon
15th Jan 2024 09:38

The company could not be engaged in an ice cream selling business at any point and also now be dormant, so which is it?

In any event you can't have BADR on the sale of the property, for several reasons, all of which are in the manual already linked. The main reason of course is that they've not disposed of a business.

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Replying to Duggimon:
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By FactChecker
15th Jan 2024 14:05

Don't disagree with either of your first two conclusions - particularly the first one which appears to kill this option stone dead (although "Husband and Wife bought a commercial property" doesn't state in what capacity they made the purchase ... as individuals, as sole traders, as a partnership, etc).

But FWIW you don't HAVE to dispose of a business (although it's then easier to understand) ... depending on all the relevant circumstances (per suggested manual or even better the legislation) relief *may* apply to disposal of business assets (the clue being in the words behind the acronym).

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