How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • Go back-and-forth until satisfied
    Rate the answer you receive.
Ask taxadvisor.uk Your Own Question
taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 6386
Experience:  FCCA - over 40 years experience as a qualified accountant (UK based Practitioner)
54961312
Type Your Tax Question Here...
taxadvisor.uk is online now

My husband and I jointly own a second property and are about

This answer was rated:

My husband and I jointly own a second property and are about to sell it. I have managed it as a holiday let since 2015 and have paid tax as a self employed person on all the profits. I am retired and pay basic rate tax, he works full time and pays higher rate. Can we reduce the CGT if he transfers his half to me now, right before the sale? Am I eligible for entrepreneurs relief as it's the only property I manage and won't buy another?
JA: Are you filing as a sole proprietor or independent contractor?
Customer: Sole proprietor
JA: Anything else you want the Accountant to know before I connect you?
Customer: Some numbers maybe. We paid 135,000 for the house in 2013 and have never lived there. The sale price is £230,000. Estimated costs of buying and selling are £10,000. No improvements made. It's never been let to tenants, just holiday makers.

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.
Many thanks

Thank you for your question.

I am not clear why you declared 100% of the profits as sole trader when the property is jointly owned. Profits should have been declared on 50:50 basis.

Transfer of 50% ownership to you close to sale would have bells ringing at HMRC. You should give yourselves atleast 3 months to sell the property after transfer to you. As it happens, you would be in the new tax year then.

Criteria for Entrepreneurs' Relief is both of the following must apply for at least 2 years up to the date you sell your business:

- you’re a sole trader or business partner

- you’ve owned the business for at least 2 years

You appear to qualify on second condition and I have doubts that HMRC would accept first condition unless you are able to demonstrate you had 100% beneficial interest in the property all the time you have traded as holiday let business. More on Entrepreneurs' Relief here

https://www.gov.uk/entrepreneurs-relief

You may not like the answer, but as a professional, I have to give you the best advice possible based on the facts. I'm sure you would rather know the truth.

My aim is to give you a professional service. I hope this is helpful and answers your question.

Please remember to rate my service by selecting the 5 stars at the top of the screen before you leave JA today. If you need more assistance, please use the reply box below and let me know. It has been my pleasure to assist you with your question.

 

taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 4 days ago.
Thank you. To answer your question I assumed that as holiday letting counts as self employment and I did all the work the profits counted as mine. I do my own return and didn't get advice.
We want to sell now spit looks like it best not to transfer or claim relief. Is that the gist of your advice?

I thank you for accepting my answer and phone call.

Many thanks