Capital gains tax

Q: I am a GP partner and need advice on capital gains tax (CGT) on the sale of a practice premises share to our new partner. Three full-time partners, for simplicity, Drs A, B and C, bought the surgery in 1995/96 for £240,000. Each partner had a loan and endowment policy for £80,000. When Dr A retired the surgery was valued at £330,000, so Drs B and C bought her share for £110,000. Drs B and C paid Dr A £27,000 by raising another bank loan and took over Dr A's initial loan (an £83,000 interest-only payments loan) until we sold her share to new partner Dr D, in July 2009 for £130,000. This was a third of the surgery's £390,000 valuation at the time. What is the capital gain for Drs B and C if profits are shared equally? We do not have any capital gains in 2009/10 so what will be the taxable capital gain considering the £10,100 tax-free allowance for each partner? Dr C took retirement as a full-time partner and rejoined as a part-time partner in July 2009. Does Dr C qualify for entrepreneurs' relief on her capital gain?

by Jenny Stone

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