A client I recently took over rent out residential properites. He's not registered as a self employed business, then rent have always just been entered as rental income on his tax return.
He is looking to sell the properties and asked about rolling over the gains. I said that as it's not a trade he wouldn't be able to. He argued that it is a trade so he should be able to.
I can find nothing to do with rollover relief that determines the definition of a trade - I'm assuming that as he isn't registered as elef employed and paying NI on the rental profits this would be the qualifying factor.
Can anyone advise if this is correct or if there's anyway he can get rollover relief?
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He's not registered as a self employed business, then rent have always just been entered as rental income on his tax return.
Presumably 'not registered as a self employed business' (in relation to the property letting) because he isn't carrying on a trade (assuming we aren't talking about FHL).
I can find nothing to do with rollover relief that determines the definition of a trade - I'm assuming that as he isn't registered as elef employed and paying NI on the rental profits this would be the qualifying factor.
The qualifying factor is that holding residential property (not FHL) for letting isn't a trade.
As you suggest, had he thought it was a trade, he would presumably have reported it as such and paid the appropriate tax and NI.
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4300#...
Is worth a read re marshalling your arguments vis a vis convincing the client.
Also some of the discussion on this earlier thread re storage container rental whilst likely not being the same activity may help your thinking about various arguments re renting land and trades.
https://www.accountingweb.co.uk/any-answers/storage-units-trading-or-ren...
