Will I pay CGT on my home/business ?

hoofy

Back in 1986 I bought a bungalow on a busy main road with a decent size back garden and a workshop at the back. I had a job at the time but in the evenings I used to bust pallets and make firewood in the workshop. I bought a couple of saw benches and a few other tools. I started buying second hand timber from demolition sites and stacked it up on the garden and put a hand written sign on the pavement "Second hand timber for sale". 

Over the years I got more and more people coming through the gate so I bought more timber and stacked it up on the garden. 

Eventually it became a thriving business with every space in the back garden filled with packs of new timber and me still living in the bungalow at the front. Just rolling out of bed in the morning and opening the gates and then going back into the house and waiting until a customer turns up. Proper working from home.

I am now thinking of retiring. I have not done anything to the back of the property, if I get rid of all the timber the garden and workshop are still how they were when I moved in back in 1986.

If I sell the property will I have to pay any CGT?

It wouldn't be getting sold as a business or a going concern, just a bungalow with a decent back garden and a workshop.

NorthYorkie

Are the Revenue aware of the activities carried on from the workshop/back garden?

If they regard you as carrying on a business, then the situation could be quite complicated. You say you are buying in timber (originally scrap timber from demolition sites, but later unused timber), for resale and that this activity was 'thriving'. So there seems to be an strong argument that you were carrying on a business from the workshop/back garden. (A secondary issue would be whether you were making taxable profits or allowable losses, but that is not relevant for Capital Gains Tax issues).

The private residence relief applies to a 'dwelling house' owned and occupied as your principal private residence together with land owned and occupied for the 'enjoyment' of that residence as a residence. If you are regarded as carrying on a business, then an argument can be made that relief is not available on the workshop and that part of the back garden used for the storage of the timber.

If the amounts likely to be involved are significant, then you need advice from a professionally qualified tax adviser.

hoofy

NorthYorkie said:

The private residence relief applies to a 'dwelling house' owned and occupied as your principal private residence together with land owned and occupied for the 'enjoyment' of that residence as a residence. If you are regarded as carrying on a business, then an argument can be made that relief is not available on the workshop and that part of the back garden used for the storage of the timber.

Would I not have a counter argument that I didn't charge my Ltd co (as it became) any rent to use my land and workshop?

mta999

rent would come under the profit and loss account, not the capital account ie when you did your tax return for the business each year rent would come out of that and any rent received by you would be declared on your personal self assessment return.

hoofy

mta999 said:

rent would come under the profit and loss account, not the capital account ie when you did your tax return for the business each year rent would come out of that and any rent received by you would be declared on your personal self assessment return.

I thought that might be the case. I probably should have charged rent but too late now.

I'll speak to my accountant. I'll be needing him anyway to wind up my Ltd Co.

lincroft1710

As I presume there was no planning permission applied for/granted for business use of the garden, it had no value other than garden land. If the land is returned to garden use, it is going to be very difficult to prove what part of the land was used for business