Q:I am the sole owner of my practice premises, having bought out the retiring partners over the years. My new partners in the practice, along with myself, 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 as a company.
Do the premises qualify as a business asset for capital gains tax (CGT) purposes? If so, at what rate? If I were to gift the property to a company formed by my wife and children, will they be liable for stamp duty, and would any potential CGT on the gifting of the property be held over by the family?
A: If you gift your premises to your family company, you will have CGT to pay on the gain. Although the premises is 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 market value and the cost of the property. You do have an annual exemption of £10,100. Your accountant can calculate an estimate of the CGT that would be payable.