Entrepreneurs' Relief on selling non-development company running buy to let rental properties?

Discussion in 'Accounts & Finance' started by AlexSmith2, Aug 8, 2019.

  1. AlexSmith2

    AlexSmith2 UKBF Newcomer Free Member

    10 2
    As far as I'm aware, Entrepreneurs' Relief to reduce CGT doesn't apply to a run-of-the-mill limited company that buys and rents out buy to let properties (not holiday lets etc.) without significant development work. We haven't developed the properties other than relatively minor works like new laminate flooring, DIY repairs etc.

    However, every chartered accountant or tax expert I go to see for initial consultations and explain our situation to clearly keenly suggests it as an option as we're looking to sell our company.

    Therefore, I was wondering if there is any way Entrepreneurs' Relief could be used to pay CGT at the lower rate for a company running a portfolio of UK residential rental properties please?

    If it did, it'd save us a huge amount of CGT.

    Thank you.
     
    Posted: Aug 8, 2019 By: AlexSmith2 Member since: Mar 16, 2018
    #1
  2. Adam93

    Adam93 UKBF Regular Free Member

    261 48
    Nope.

    The company is not trading for the purposes of entrepreneurs relief and therefore no ER will be available.

    If the company was a trading company and happened to have one rental property which was less than 20% of the overall activities/balance sheet of the company, then ER would be available. If it is just renting property, then no ER will be available.
     
    Posted: Aug 8, 2019 By: Adam93 Member since: Jan 18, 2018
    #2
  3. AlexSmith2

    AlexSmith2 UKBF Newcomer Free Member

    10 2
    Thanks a million.

    It's disappointing to hear of course as our CGT will be much higher, but HMRC set the rules.

    So I'm more knowledgeable, may I ask why such a company would not classify as a trading company?
     
    Posted: Aug 8, 2019 By: AlexSmith2 Member since: Mar 16, 2018
    #3