Deferring the property gain

By Tolley

The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Deferring the property gain
  • Categorising the gain
  • Deferral reliefs for non-business assets
  • Deferral reliefs for business assets
  • Timing of the disposal

There are various capital gains tax reliefs which a taxpayer can utilise to defer the capital gain on a property disposal until a later time, thereby postponing the tax bill. These are discussed below.

Categorising the gain

The first step indeciding what deferral reliefs may be appropriate to your client's situation is to decide whether the gain is a business asset or a non-business asset. Where your client disposes of a business asset, a wider variety of reliefs are available.

Non-business assets

A property business is not normally considered to be a trade as the properties are held for investment purposes. If the property business was a trade, the sale of property would be a sale of stock and would therefore be chargeable to income tax. Whether the letting of property can amount to a trade will be one of fact.


This is discussed inthe Application of the badges of trade guidance note.

On this basis, the sale of a property used for the purposes of letting would normally be a non-business asset.

Business assets

As far as land is concerned, generally the following can be considered to be business assets:

  • an interest inan asset used inthe trade of the individual, or
  • an interest inan asset used inthe trade of the individual's personal company

However you will need to look at the conditions for each relief carefully to ensure these are met.

Therefore, if the property concerned is owned by the individual but used by a company inwhich he owns at least 5% of the voting rights, usually the property will be a business asset.

Having said that let

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