The following Property practice note provides comprehensive and up to date legal information covering:
Capital gains tax (CGT) may be payable on a gain from the disposal of all or part of a business asset.
A business asset is an asset related to a trade or business owned by an individual or the business.
Examples of business assets include:
plant and machinery
a furnished holiday letting (FHL)
registered trade marks
Business assets attract relief from CGT; investment assets do not.
CGT reliefs can be applied if an asset has been used for business purposes.
For a property to qualify as a FHL and take advantage of CGT relief it must be:
in the UK or European Economic Area (EEA)
furnished (sufficient furniture should be provided for occupation as holiday accommodation)
available for commercial letting to the public as holiday accommodation for at least 210 days (the availability condition)
commercially let as holiday accommodation for at least 105 days a year (the occupancy condition)
let at the market rent
a short-term letting of a maximum of 31 days
‘Commercial’ means let on a commercial basis with a view to making a profit. Off-season lettings producing no profit, but which help with maintenance costs, can be treated as commercial.
FHL treatment is mandatory. Lettings which qualify cannot be taxed under the normal property income rules.
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