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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15940
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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i have an offer shop to be purchased development I

Resolved Question:

i have an offer for my shop to be purchased for re development
I currently rent it to my business as I own it in my own name, after sale I would not relocate but close the business
What capital gains tax would I pay on the sale; I expect to make a profit of £200,000
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.

Hi.

Provided you meet the criteria set out in HS275 here, you should qualify for entrepreneurs' relief for some if not all of the gain on the disposal of the asset which you own personally but which is used in your business. If you do qualify, that would limit your CGT charge to a rate of 10% of the net taxable gain. The first £11,100 of gains made by an individual in any one tax year (2015/16) are exempt from Capital Gains Tax.

There is a caveat, however. You say you rent the shop to your business. As that is the case, the 10% rate of CGT is restricted to that part of the gain which arose up to 5 April 2008 on a pro-rata basis. The balance of the gain will be subject to CGT at 18%, 28% or a combination of the two rates depending on the level of your income in the tax year of disposal of the business asset. Take a look under the heading "An associated disposal" on pages 4 and 5 of HS275 for the specific rules which restrict the relief. See example 4 for an illustration of the restriction to the relief on page 6.

I hope this helps but let me know if you have any further questions.

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