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bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4783
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I sold my business premises (sole trader) for £180,000

Customer Question

I sold my business premises (sole trader) for £180,000 in Feb 2014, which I bought in 1996 for £68,500. Improvements to the property, for which receipts exist, amount to £20,000. As part of my separation agreement, I disponed the marital home to my wife and, in order to qualify for a new mortgage, paid £38,000 in alimont costs, based on the projected term of my children's higher education. I purchased a new home with studio outbuilding in order to carry on my business, using the remainder of my gains from the sale of my previous business premises to fund the down-payment and secured a mortgage of 80,000 for the remainder of the purchase cost. My business has registered small losses in some recent years, but a small profit of around £5000 for the year 14-15 for which the tax-return is now due. My divorce is due to come through in April. Any help on what my capital gains liability will be and whether I qualify for allowances would be gratefully received. Thanks Russell
Submitted: 2 years ago.
Category: Tax
Customer: replied 2 years ago.
My new home is in joint names with my partner, whom I will marry later this year. Both my previous premises and the separate outbuilding at my new home were/are in continuous business use and were/are insured separately to my dwelling.
Expert:  bigduckontax replied 2 years ago.
Hello Russell, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
You will be liable for Capital Gains Tax (CGT) on the gain made on the sale of your original business premises. The gain is 180K - 68.5K - 20K = 91.5K. It would appear from the tenor of you question that some of the gain was spent on new business premises, but is silent as to the quantum. That sum would be entitled to Rollover Relief which merely postpones the gain to some future indeterminate date when you cease trading.
CGT is levied at 18% or 28% or a combination of the two rates depending on your income including the gain the tax year of disposal.
Your marital position is irrelevant in this matter.
I do hope that you find my reply useful.