When is a property a business asset? By Rebecca Benneyworth

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Property held by an individual can be a business asset for the purposes of Capital Gains Tax Business Asset Taper relief, but there have been several changes in the rules on this since 1998 when taper relief was introduced.

First, residential property, such as buy to let homes and flats can never be a business asset for taper relief, as the requirement is that the asset is used by a business, and letting is not regarded as a business for these purposes. It is just possible that residential property might qualify as representative accommodation in a farm or similar business, but buy to lets are out they qualify only for non business taper.

For commercial property the position can be very complex if there have been changes in tenant over the period since 1998.

Phase 1

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By Anonymous
13th Jun 2007 11:27

Obviously not if it does not qualify for a particular year, so be wary of that trap, as you will have mixed use.

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By rwwjm
19th Jun 2007 15:39

Does property need to be let to qualify for Business asset taper
TCGA 1992 Sch A1 at para 5 (1A) refers only to the asset being "used" in order for it to qualify for Business asset taper where it is owned by an individual and it is used for the purposes of a trade by another individual. I can find no requirement that the asset must be "let" by the owner to the user.
I have a case of 2 brothers owning a farm jointly. One brother (A) trades from the farm, the other (B) allowing this without any payment passing or formal lease being in place. B is employed elsewhere and has no connection with A's farming trade, owning a share in the farm for historical family reasons. Until 5/4/04 B did not qualify for Business asset taper on his share of the farm.
If the whole farm is now sold does B qualify for Business asset taper from 5/4/04 on the gain realised on his share of the farm, using the mixed use basis of calculation?
Any comments gratefully received.

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10th Jul 2007 11:36

Question - why 10 Years?
This article says "Once again, the change in status will only be fully felt by those owning property from before the date of change at a point ten years after the change – that is in 2014." I don't quite understand this.

We own a commercial property let for business use. If we sell it now, do we not qualify for full business asset taper relief since the property became a business asset in 2004 under the new definition and we are now more than two years from that date?

Any explanation gratefully received.

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