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bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4425
Experience:  FCCA FCMA CGMA ACIS
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I am recently divorced and there is joint partnership on a

Customer Question

I am recently divorced and there is joint partnership on a business premises. It was bought off plan, by the new Parnership, ( husband and I for £405K) and has now been sold for £810k. My share to me is £200k. Its being sold as an ongoing buisness with a rental income of £31k per annum.
Question that I am trying to resolve is the amount of Capital tax I will have to pay, does this sale qualify for Enterprenurial relief, ie 10%?.
I will have no other income this tax year that will attract CGT.
Regards,
***** *****e
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello Douglas, I am Keith, one of the experts on Just answer, and pleased to be able to help you with your question. Actually, your share is an irrelevance as it is only the gain on severance which is taxed in this situation. No matter though; from the tenor of your question there is little doubt that Entrepreneurs' Relief (ER) will apply which limits the rate of tax to a flat 10% in place of the normal 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of partnership dissolution. Without an indication of the actusl gain I can go no further, but rest assured ER will apply. You have three years from cessation to claim ER. I do hope that I have shed some light on your conundrum.
Expert:  TonyTax replied 2 years ago.

Hi. I have a different answer.

It's not clear whether the property was ever used for a business other than just letting which the Treasury does not see as a business in the true sense of the word. A gain made on the sale of a property which is sold and which was only ever let during your ownership of it will not qualify for ER.

Even if there was a business at some point, from the time that the property was let or 6 April 2008 if earlier until its sale,that part of any gain will not qualify for ER. Take a look at Example 4 in HS275 here:

https://www.gov.uk/government/publications/entrepreneurs-relief-hs275-self-assessment-helpsheet/hs275-entrepreneurs-relief-2015

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

Customer: replied 2 years ago.

From begining, the property was used as a Physiotheraphy Clinic for 3 years and then the premises was too small to expand. The Clinic then moved to a much larger premises, rented. Once moved out, the property was leased out to a company, which is still there.

Does this means that for initial 3 years of business, the gain value of the property would be at ER rate??

Expert:  TonyTax replied 2 years ago.

What period did the clinic cover exactly? When did the letting start?

Expert:  bigduckontax replied 2 years ago.
A full summary of dates is needed here to determine the CGT position. Remember the three year rule for claiming ER; could be significant.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4425
Experience: FCCA FCMA CGMA ACIS
bigduckontax and 2 other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.
Expert:  TonyTax replied 2 years ago.
Any period post 5 April 2008 when the property was let will not qualify for ER as Example 4 shows. It should have been made clear much earlier. That is why I posted my alternative answer. It will not be good if your gain calculation is rejected by HMRC because of an overstated ER claim. Good luck.