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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 40 years experience as a qualified accountant (UK based Practitioner)
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We are a limited company. We bought a property 5 years ago

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Hi
JA: Hello. How can I help?
Customer: We are a limited company. We bought a property 5 years ago and now want to sell part of it and need advise on tax implications including CGT
JA: Have you talked to a tax professional about this?
Customer: no
JA: Is there anything else the Accountant should know before I connect you? Rest assured that they'll be able to help you.
Customer: no

Hello and welcome to JustAnswer. I’mCustomer a UK qualified accountant. Reviewing your question and will respond to you shortly.
Many thanks

Thank you for your question.

As the property is in the name of LTD Company, any gain made from sale of it will be chargeable to tax at corporation tax rate. There is no CGT rate for incorporated companies. Also there is no gains allowance available to corporate companies.

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

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.

Customer: replied 10 days ago.
Just bit more background: We bought a property using a Limited company. We now have a planning permission to develop the site and convert it to residential and retail. We demolished part of the site and we want to sell a land with a planning permission.
So what is the tax implication? will the sale of the this piece of land be considered as an income and should be taxed as normal? and what about VAT ( where are VAT registered) and when bought the property we only pay the purchase price but not VAT at the time
Customer: replied 10 days ago.
hello, it's first time I use this. Am I to expect an answer to my follow up question?

Thank you for your reply.

This is not income but a capital gain. It will be taxed as taxable profits at CT rates.

If the company had opted to tax land and buildings when the property was bought then the sale of land would attract VAT.

I hope this is helpful and answers your question.

Customer: replied 10 days ago.
just one more follow up please. Let's say we bought the property for 300K plus vat, after 5 years, we sold part of the property (3/4 of property) for 600K. We would have made a profit on capital asset (land). During the 5 years, we made a loss every year.
So how will this profit be calculated in principle?

Thank you for your reply.

Trading loss is different from capital gain. Your tax on sale of land will be calculated separately from trading profits.

I hope this is helpful. You should give your accountant all relevant information for completion of CT600 return.

Many thanks.

Hi there

Just checking to see if you need me to clarify anything or if you have any additional questions - I am happy to help!

Many thanks

Customer: replied 9 days ago.
Hey, yes, I just want to know if there are steps that could be taken to minimise the tax prior to the sale.
By the way the company that owns the property is in business property and currently the only revenue is the rent
Thanks

Thank you for your reply.

There is little that could be done to minimise tax arising from gain made from sale of land.

If there are no other issues I will appreciate if we could regard my responses/answer to this question as accepted.

Many thanks

taxadvisor.uk and other Tax Specialists are ready to help you

I thank you for accepting my answer.

I'm glad I could help you resolve this today. Please follow up here if you have any other questions.

Best wishes.