private residence relieve on business asset

tigerstripe_2

I sold my guest house in 2006 and was due to pay capital gains, I defered the gain with provisional roll over relief as I wanted to buy another replacement business. I now have a change of plan and decided to pay the capital gain due along with interest. I assume that as I sold in 2006 I can still deduct the business rate taper relief, I have claimed private residence relieve for 30% of the property would it be a straightforward matter of deducting the taper from the business portion or is there a particular method of apportionment required because of the private portion.
any help please. Thankyou

Pennywise

I really would advise you to let your accountant sort this out as it is a minefield.

At the very least, there is the issue of the order in which the two reliefs are given and how they inter-react. You have business asset taper relief on the business proportion and non business asset taper relief on the non business proportion, as well as claiming PPR relief, and all this has to be done in the right order.

The 30% split of private/business may also need reconsidering. Rooms and communal areas used by both yourself as live-in owners and your guests, such as kitchens, shared bathrooms, shared dining rooms and lounges etc also need careful attention as you may well be entitled to have them regarded as part of your principal private residence on the grounds that they aren't exclusively for business use - that means that perhaps only the guest bedrooms and guest bathrooms form the "business" rooms, thus potentially increasing the 30% private to a much higher figure. Potentially even higher if you actually moved yourself and family into some of the guest bedrooms out of season which is also common as owners accommodation tends to be poor and used only in high season when all available letting rooms are needed. It all hinges on whether the building is a hotel in which you live or whether it is your home, part of which you use as a hotel - there is strong argument that the smaller single unit guest houses can be argued to be the former as they are usually small enough to be suitable just for sole occupancy of a family without being a guest house at all - obviously if you have knocked several together or have what is clearly a hotel rather than a large dwelling house, then the facts speak for themselves - i.e. it is a hotel and not a dwelling.

It is a while since I've done one, so I'm a bit rusty, but it does get VERY complicated and even to a tax accountant like myself, who is used to tax being the opposite of common sense, the way the calculations work is about as non-sensical as you can get.

Also, it may also be possible to claim lettings relief of £40,000 or the amount of PPR whichever is the lower, which is something that you won't find in the HMR's guidance - unfortunately whilst that is good in reducing your gain, it messes up the business asset and non business asset taper relief calculations even more!

This is one where I would definitely let your accountant have the headaches - unless the figures are small, you could very easily end up getting it badly wrong.