Q: I am the sole owner of my practice premises, having bought out the retiring partners. My new partners in the practice and I as the tenants signed a 20-year lease last year.
As a part of inheritance tax planning, I wish to gift the practice premises to my family who will run it via a company.
Do the premises qualify as a business asset for capital gains tax (CGT) purposes? If so, what rate of tax is due? If I were to gift the property to a company formed by my family, does any CGT potentially arise on the gifting of the property to the family?
A: If you gift your premises to your family's company, you will have CGT to pay on the gain. Although the surgery premises are a business asset, you will not qualify for entrepreneurs'
relief as you are not withdrawing from the business. This means you will pay CGT at 28 per cent on the difference between the current market value of the surgery and what it cost you to acquire.
However, you do have an annual CGT exemption of £10,100. Your accountant should be able to calculate an estimate of the likely CGT payable.