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There's
no business
Gordon Brown has been very generous to owners of business assets over the last few years. The effective rate of capital gains tax on business assets drops to just 10% after you have owned them for two years, against a 40% rate for non-business. The non-business rate only starts to reduce after three years, and then it only drops by 2% for each year - so after 6 years you are still likely to pay CGT at 32%.
The problem is the definition of business assets. Some things are obviously businesses - your own trade, whether you own it as a company or unincorporated, should qualify. If you are an outside investor in a business, it depends what the company does, and whether it's quoted. Sometimes it's not clear what the Revenue will think of a particular company, and the rules are still so new that the courts haven't had the chance to clarify where the borderlines are.
The first case on taper relief has dealt with something that is obvious to the Revenue, but is probably a lot less obvious to taxpayers in general. If your "business" is letting property out, it doesn't generally qualify for business assets taper relief. The Revenue have always drawn a line between "trade" (which usually gets all the reliefs going) and "renting" (which doesn't, for some reason). Even if you are an active landlord who gets involved in providing services to tenants, it's unlikely to qualify for the extra
reliefs.
There are some exceptions: renting to an unquoted trading company has qualified since April 2000; renting to any other unquoted trading business will qualify from April 2004; running a business of short furnished holiday letting has been treated as a trade for many years; and if you are actually running a hotel, it's counted as trading rather than renting.
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