Capital Gains Tax and having a business

Mohomayhemmadness

Hello everyone,
I have recently downsized my property and am now occupying my late mother in law’s property with my husband. 

I know I wouldn’t normally need to pay CGT because of the RPR, but I did run a business from my property for about 2 years, 16 years ago.  It was more of an expensive hobby than a business and I closed it because I was losing so much money.

Is anybody able to advise me please whether or not I’m still exempt from paying CGT?
Many thanks.  

eskbanker

Which disposal transaction are you thinking of?

[Deleted User]

Mohomayhemmadness said:

Hello everyone,
I have recently downsized my property and am now occupying my late mother in law’s property with my husband. 

I know I wouldn’t normally need to pay CGT because of the RPR, but I did run a business from my property for about 2 years, 16 years ago.  It was more of an expensive hobby than a business and I closed it because I was losing so much money.

Is anybody able to advise me please whether or not I’m still exempt from paying CGT?
Many thanks.  

Are we talking about your house which, until recently, was your primary residence, business or no business? 

How long did you own it? For how long was it not your main residence?

Bookworm225

it boils down to what do you mean by "ran a business from it"?

I assume you continued to live in the property as the marital main/only home, so the question then is what did the business "need" from your property?

was any part of the building given over to the business, eg:
- you created a studio and used that space for therapy sessions that people came to?
- your business involved stock which you stored in the house?

Mohomayhemmadness

Hi, thank you for your comment. I ran it in my conservatory and clients came for therapy. It didn’t last long though, and I lost money on it, so hopefully I won’t be liable.. 

Mohomayhemmadness

The house was still my main residence with my family. I lived there for 26 years and moved last year. I ran the business for two years 15 years ago. 

Mohomayhemmadness

eskbanker said:

Which disposal transaction are you thinking of?

I’ve just seen how to reply to each person’s comments, haha 😜 
I’m not sure what you mean by disposal transaction, but I sold my main property last year after 26 years and downsized to my mother in law’s bungalow. I ran my therapy business 15 years ago for two years. 

Bookworm225

Mohomayhemmadness said:

Hi, thank you for your comment. I ran it in my conservatory and clients came for therapy. It didn’t last long though, and I lost money on it, so hopefully I won’t be liable.. 

you can forget about CGT, it has no impact on you.

to lose Private Residence Relief (PRR), and therefore incur CGT when selling, you have to have created a dedicated space in the property (or has used a self contained building such as garden cabin) used wholly and exclusively for business purposes.

In your case you claim that you did not. The conservatory was still used by the family during non therapy hours of the day. Therefore 100% of the property remains entitled to 100% PRR and thus zero CGT liability 

eskbanker

Mohomayhemmadness said:

eskbanker said:

Which disposal transaction are you thinking of?

I’ve just seen how to reply to each person’s comments, haha 😜 
I’m not sure what you mean by disposal transaction, but I sold my main property last year after 26 years and downsized to my mother in law’s bungalow. I ran my therapy business 15 years ago for two years. 

I was confused about what you meant when asking if you were "still exempt from paying CGT" so wasn't sure if you were referring to the property sale last year or one in the future - it now seems clear that it's the former and has been clarified that CGT shouldn't be an issue, which is just as well, as it would have been payable within 60 days of selling!

Mohomayhemmadness

Bookworm225 said:

Mohomayhemmadness said:

Hi, thank you for your comment. I ran it in my conservatory and clients came for therapy. It didn’t last long though, and I lost money on it, so hopefully I won’t be liable.. 

you can forget about CGT, it has no impact on you.

to lose Private Residence Relief (PRR), and therefore incur CGT when selling, you have to have created a dedicated space in the property (or has used a self contained building such as garden cabin) used wholly and exclusively for business purposes.

In your case you claim that you did not. The conservatory was still used by the family during non therapy hours of the day. Therefore 100% of the property remains entitled to 100% PRR and thus zero CGT liability 

Thank you so much, you have put my mind at rest. 🙏🏻

Mohomayhemmadness

eskbanker said:

Mohomayhemmadness said:

eskbanker said:

Which disposal transaction are you thinking of?

I’ve just seen how to reply to each person’s comments, haha 😜 
I’m not sure what you mean by disposal transaction, but I sold my main property last year after 26 years and downsized to my mother in law’s bungalow. I ran my therapy business 15 years ago for two years. 

I was confused about what you meant when asking if you were "still exempt from paying CGT" so wasn't sure if you were referring to the property sale last year or one in the future - it now seems clear that it's the former and has been clarified that CGT shouldn't be an issue, which is just as well, as it would have been payable within 60 days of selling!

eskbanker said:

Mohomayhemmadness said:

eskbanker said:

Which disposal transaction are you thinking of?

I’ve just seen how to reply to each person’s comments, haha 😜 
I’m not sure what you mean by disposal transaction, but I sold my main property last year after 26 years and downsized to my mother in law’s bungalow. I ran my therapy business 15 years ago for two years. 

I was confused about what you meant when asking if you were "still exempt from paying CGT" so wasn't sure if you were referring to the property sale last year or one in the future - it now seems clear that it's the former and has been clarified that CGT shouldn't be an issue, which is just as well, as it would have been payable within 60 days of selling!

eskbanker said:

Mohomayhemmadness said:

eskbanker said:

Which disposal transaction are you thinking of?

I’ve just seen how to reply to each person’s comments, haha 😜 
I’m not sure what you mean by disposal transaction, but I sold my main property last year after 26 years and downsized to my mother in law’s bungalow. I ran my therapy business 15 years ago for two years. 

I was confused about what you meant when asking if you were "still exempt from paying CGT" so wasn't sure if you were referring to the property sale last year or one in the future - it now seems clear that it's the former and has been clarified that CGT shouldn't be an issue, which is just as well, as it would have been payable within 60 days of selling!

eskbanker said:

Mohomayhemmadness said:

eskbanker said:

Which disposal transaction are you thinking of?

I’ve just seen how to reply to each person’s comments, haha 😜 
I’m not sure what you mean by disposal transaction, but I sold my main property last year after 26 years and downsized to my mother in law’s bungalow. I ran my therapy business 15 years ago for two years. 

I was confused about what you meant when asking if you were "still exempt from paying CGT" so wasn't sure if you were referring to the property sale last year or one in the future - it now seems clear that it's the former and has been clarified that CGT shouldn't be an issue, which is just as well, as it would have been payable within 60 days of selling!

Oh my goodness - they say ignorance is bliss but that would definitely not have been a blissful situation to be in had it turned out I was liable! 😳😂
Anyway, it appears I am not, so that’s a relief,  because it would’ve been a huge sum! 😅 
Thank you to everyone for your help! 🙏🏻