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A question about capital gains tax in the U.K. I own a

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A question about capital gains tax in the U.K.
I own a commercial building and am a sole trader.
I'm thinking of selling it and it's value has greatly increased.If I was to sell it - how could I arrange my affairs to minimise or not pay any capital gains tax ?

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

Always bear in mind Benjamin Franklin's dictum that in life there are but two certainties, death and taxes!

If you sell the building off then any gain you make will be taxed through the Capital Gains Tax (CGT) regime at 10% or 20% or a combination of the two rates depending on your income including the gain in the tax year of disposal. If you reinvest in new premises within three years you can have Roll Over Relief which merely postpones CGT until the ultimate sale of the new building in the future.

If you are going out of the business altogether Entrepreneurs' Relief may apply which limits CGT to a flat rate of 10%.

I do hope that you have found my reply of assistance.

Customer: replied 7 months ago.
1 Do I apply roll over relief in the year of disposal ?2 If I had a limited company and the money came into the limited company - and I have to borrow to invest - can my loans and expenses reduce the amount of CGT that rolled over i.e. how can I reduce the liability ?

Hello, I am Keith, one of the experts on Just Answer. and pleased to be able to help you with your question.

Herr is the advice from the Gov UK Web Site; a tad long winded I regret:

'18. How to claim relief

When you claim relief you must tell HMRC about:

  • the old assets you’ve disposed of
  • the amount you received for each of those assets
  • the date on which you sold each of them
  • the new assets you’ve acquired
  • the dates on which you acquired each of them, or the dates on which unconditional contracts for the acquisition of each of these assets were entered into
  • the cost of each asset acquired
  • the amount of proceeds from the disposal of each old asset that you’ve used to acquire each new asset

You can use this form to make a claim. You can attach it to the Capital Gains Tax summary pages of your tax return. If you want to make more than one claim, you may use multiple copies of the form.

If you’re claiming roll-over relief you should use code ROR in box 8 or box 20 on the Capital gains summary pages. However, if there are other transactions that are included in the same section and more than one code could apply to box 8 or box 20, then you should use the code MUL and provide further details of all claims and elections being made in the ‘Any other information’ section (box 54) or in your supporting computation.

19. Provisional relief

You can use the form to make a declaration of your intention to use some or all of the proceeds of disposal of an old asset in the acquisition of new assets. If you intend to reinvest all of the proceeds, you can get provisional relief on the gains you make on that disposal. If you intend to reinvest part of the proceeds, you may be able to get provisional relief on part of the gains you make on that disposal. The amount of Capital Gains Tax you can defer is the amount of tax that would have been deferred if you had actually acquired a new asset costing an amount equal to that part.'

The only way CGT can be reduced is by the use of Rollover or Entrepreneurs' Relief.

I do hope that you have found my reply of assistance.

bigduckontax and other Tax Specialists are ready to help you

Thank you for your support.

Customer: replied 7 months ago.
An extension of my question - if I apply for roll over relief - when I come to sell the property which I bought with the funds - can I apply to roll over again. In other words can I apply to keep rolling over CGT provided that I keep investing in property with the capital gains ?


Customer: replied 7 months ago.
Do I have to buy the properties in the U.K. ?

As you ahve to utilise them for your business this restriction seems appropriate.

Customer: replied 7 months ago.
Is it a must - are there complications if I find good property investment opportunities abroad and use the funds for this ?

Well you could try HMRC may not object.

Customer: replied 7 months ago.

Remember the new buildings have to be used in your business.

I am off to bed now, but will respond again in the morning if needed.

Customer: replied 7 months ago.
Thank you very much.

Pleased to have been able to help.