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Entrepreneurs’ relief on property

Where you personally own the premises your business trades from, it has historically always been considered sensible to charge rent to avoid national insurance. However, on ultimate exit from the business there may be a tax issue on entrepreneurs’ relief. This is only a problem if the sale of the business itself does not generate a gain of at least £1 million.

You can claim relief on the sale of the business premises if this is linked to a sale of the business, but if full rent has been charged on the property, no relief is due.

The good news is that rents received prior to April 2008 can be ignored.

Furthermore, if full market rent has not been charged, relief is still allowed but in proportion to the discount from market rent. If this is likely to be an issue, this may be a good time to review the position.

Cathy Corns is a tax adviser and a partner at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this blog with Cathy you can call her on 01908 605552.

 

 

Date: 26th October, 2009
Author: Cathy Corns

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