a) for 54 months of 173 months' ownership, you exclusively occupied the whole property (the 54 including the 36-month period when you are treated as being in exclusive occupation)?
Yes 18 MONTHS before start up and last 36 excluded by rule

for 119 months of 173 months' ownership, 12/14ths was exclusively occupied, No

three rooms let as B&b but at occupancy average over the whole 119 months averaged 1 room in use which with bath room equates to B&b use of 2/14ths .of the property

with the remaining 2/14ths of the property being used for B&B purposes? as above

No part used exclusivly for B&b

can I send an Excel spread sheet ? it would perhaps make more sence yje bottom part pasted from spread sheet.

My wife ran B&b so wanted to seperate buisiness use in part of property to private use. There are 14 rooms bit more with cellar so more than half exclusivly for whole period as private (my half) part of my wifes half used as trade B&b.

Regards

Roger

Hi I am not sure how to send a spreadsheet

The email I sent was pasted from Word and Excel but not at all clear as you received it.

I have looked at Apportionment and CGT on a number of sites including HMS and seen stated that for the portion to be counted as gain for CGT purposes it must have been used Exclusively for the business. I have an article where the owners used part of a hotel in the winter for accommodation that was normally used for guests and this was ruled did not count for CGT. I was surprised where you said exclusively for private use I have not seen that written before only exclusively for the trade. None of the house used exclusively for trade.

For the tax returns for the business we have used 4/14ths as the costs apportionment to the business of the house costs and believe that should be the most that should be chargeable as trade for CGT. ?

I had shown the property gain as split in half to me and half to my wife is that what you had shown ? e.g. my half gain £162k wholly private if not the total gain is £324k ?

The CGT as I understand it is based on income with CGT added so first part of CGT would be at 20% till threshold of 20% rate ? and then at 28% ?

Regards

Roger

Hi

please see attached to which I refered

CG64660 - Private residence relief: part of house used for business

TCGA92/S224 (1)

TCGA92/S224 (1) states that relief shall not apply to any part of the dwelling house which is used exclusively for the purpose of a

• trade
• business
• profession,

or

• vocation.

The gain on the disposal of the dwelling house is to be apportioned between the part of the dwelling house used exclusively for one of the purposes listed above and the part used as a residence. Only the proportion of the gain apportioned to the residential part will attract relief. This is illustrated by the example at CG64674.

below is not the CG64674 which was a public house.

During the summer season the taxpayer and his family occupied the annex and used the main building for the occupation of the hotel guests. During the rest of the year, however, they occupied the whole of the building in common with their guests, who were rarely more than one or two in number. It is that feature of the case which raises the present problem, for had the taxpayer and his family remained in occupation only of the annex that would have been treated as the dwelling house which formed the taxpayers only or main residence for the purposes of the relevant statutory exemption and the rest of the building would not have been treated as a dwelling house at all and would have been outside the exemption.'

These remarks did not form part of his reasons for deciding the case and thus do not have binding authority. Although the Court of Appeal overturned the High Court decision they did not comment adversely on the above remarks. So they are a persuasive indicator of judicial thinking

None of the house was used exclusivly as trade nor all of the year so all counts for relief ?

Regards

Roger

Hi Sarah

originally we filled tax forms as a let but the guidance seemed to change where services were provided should be considered a trade so we then filled in forms as self employed not sure if that makes any difference.

I would still like to send the spreadsheet which does make it clearer the format was destroyed when I pasted I the same with from word but will try that again

Tax CGT Principal Residence disposal

Principal family residence purchased in September 1995.

Following extensive enhancements part of the property was let offering B&b accommodation from April 1997

Three of the seven bedrooms let as demand enabled.

Ground floor en suite bathroom.

1st floor double bedroom with private bath.

1st floor twin bedroom with private bath.

None of the property was used exclusively for B&b for example the three let bedrooms are offered with bathrooms which are our only bathrooms and are used by us as available. The Christmas period is not let and the dining room converted to a lounge.

During quiet periods the bedrooms are offered at no cost to our friends or relatives that visit us. The dining room used by guests for breakfast and by us during the day and evening.

It was necessary to keep the 3 bathrooms, ground floor hallway, dining room and the first floor landing in good standard of repair, Heated and lit to a good quality with cleaning required for the three bedrooms and bathrooms, these areas representing around a half of the property. Lights left on at night for safety and heating for ground and middle floor areas.

For income Tax purposes 4/14 ths of total the costs were put to the B&b which is lower cost than the actual costs expended as above.

Apportionmment

The average bedroom occupancy for B&b over the whole period of letting is less than 1 which with the associated bathroom represents approx. 2/14ths of the property. In view of the above it would seem therefore that this lower proportion of the property should be allocated to B&b for Capital gains calculations rather than that used above for Tax basis.

The property was used purely as Private residence use from Sept95-April97 and the last 36 Months are rule excluded.

Initial expenditure for the B&b let was made of some £25000 of which enhancements £5000 with £20000 on furniture carpets bedding crockery etc.

If the property is sold as a private residence the above expenditure on set up we understand is not chargeable and therefore will be a loss.

Believe PRR and letting relief should be allowable as calculated as below.

Sale price

Less Purchase cost

Less Enhancement costs

Less Enhancement B&b (bathroom)

Equals total Gain

Ownership 173 Months

Sole use Principal residence 18 months

Total including last 3 years excluded 36 Months

Total excluded from gain 54 Months

Remaining period partial B&b 119 Months

Gain excluding 54/173 Months 69 % of total gain

2/14ths as B&b use

12/14ths Private Residence Relief £183953

Remaining gain due to Let £30659

Letting relief

Letting relief in accordance with Help sheet example 8 of a B&b Let

The relief the smaller of £40000 or above PRR calculated or gain from let.

Gain from Let £30659 the smaller

Believe No CGT should be payable