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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15755
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I BOUGHT A COMMERCIAL PROPERTY IN 1985 TO START MY BUSINESS.

Customer Question

I BOUGHT A COMMERCIAL PROPERTY IN 1985 TO START MY BUSINESS. IT COST £18000 PLUS LOAN INTEREST OF £14000 OVER 10 YEARS. OVER THE LAST 30 YEARS I HAVE SPENT £54000 ON REFURBISHING , IMPROVING AND MAINTENANCE. I AM NOW RETIRED, WILL THERE BE ANY TAX TO PAY IF I SELL THE PROPERTY.
I WAS A LIMITED COMPANY.
Submitted: 8 months ago.
Category: Tax
Expert:  TonyTax replied 8 months ago.
Hi. Can you tell me what you think you might be able to sell the property for? Is it owned by you personally as opposed to by the limited company? If the property is owned by you personally, did your company pay you rent for its use? How long ago did the business cease?
Customer: replied 8 months ago.
I could sell for approx £110000. I ran my business from these premises as a sole trader from 1985 and became limited in 2003
I didnt receive any rent from the limited company.
I retired in July 2009
Expert:  TonyTax replied 8 months ago.
Thanks. Leave this with me while I draft my answer.
Expert:  TonyTax replied 8 months ago.
As the property is being sold more than three years after your business ceased, you won't unfortunately qualify for entrepreneurs' relief which would have limited the Capital Gains Tax charge to a flat rate of 10%. Instead, you will pay CGT at 10% or 20% or a combination of the two rates depending on the level of your income in the tax year or disposal of the property. The costs of refurbishing and improving the property will be deductible but not the costs of general maintenance. HMRC may disallow any improvement expenditure you cannot prove in the form of receipts and invoices, though photographic evidence may help. I would claim the refurbishment and improvement element of the expenditure in any event as HMRC may not question it. If you sold the property for £110,000 and all the £54,000 was deductible, you would have a gain of £38,000 (£110,000 - £18,000 - £54,000). The first £11,100 would be covered by the annual CGT exemption leaving you with a net taxable gain of £26,900 on which you would pay CGT. I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15755
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 8 months ago.
Thanks Tony , excellent service, very helpful, will recommend you.Kind Regards Ken
Expert:  TonyTax replied 8 months ago.
Thanks. Good luck with the property disposal.

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