Q:I have rented my surgery out to my assistant for five years. I now want to sell the premises to him. Will I be paying capital gains tax (CGT) of 40 per cent on the profit?
As I have rented the surgery and their patients to him, he is paying me £7,500 every three months. My accountant believes I would be only liable for normal income tax, but others claim I would be paying 40 per cent tax on what they call 'unearned income'.
A: If you have been receiving rent then you need to declare this on your tax return and it would be taxable at your highest rate of tax.
When you come to sell the premises you would pay CGT on the difference between the sale proceeds and the original cost. The government recently announced changes to CGT, which means if the gain on the sale plus your other income exceeds £37,400 then you would pay CGT at 28 per cent and not 40 per cent.
Unfortunately, as the premises are no longer your business premises, you will not be able to claim entrepreneurs' relief.