Capital gains tax issues 'are complex for small business owners'

Date: 15th July 2008

Recent changes to capital gains tax rules are not as generous for small businesses as it was initially believed, accountants have claimed.

An article in the Telegraph explained that some accountants had thought that the late change to the recent finance bill would mean "that a business partner or shareholder renting assets to a business where they had invested may be able to take greater advantage of the relief".

However, accountants explained that the move was not as generous as it first appeared as the relief is only available on the first £1 million of gains.

There are also restrictions on the concession if the owner has been paid market rate rent for the property.

Accountant Lisa Macpherson from PKF explained to the paper that the move put business owners planning on selling up in a difficult position. Further changes to the 2008 Finance Bill mean that any market rent paid before April 6th will be ignored on a business property sale.

"Should they stop charging rent now so that more entrepreneurs' relief is available on the sale or keep charging rent for the short-term National Insurance contribution savings?" Ms Macpherson wondered.