Capital Gain Tax Relief on Letting Property

You may be able to delay paying Capital Gains Tax if you:

  • sell business assets

  • and buy new assets

Rollover relief under TCGA 1992, s 152 is only available on the disposal of assets used in a trade.

letting property is not normally considered to be a trade even if it is the landlord’s full-time occupation.

Commercial letting of furnished holiday accommodation is considered to be a trade.

HMRC’sCapital Gains Manual at CG60260 makes this clear.

It may be possible to argue that letting property is a trade. But the law indicates this as difficult to prove. In the case of Salisbury House Estate Ltd v Fry 15 TC 266 court stated:

‘A landowner cannot be considered as carrying on a trade of owning land because he makes an income from letting it.’

HMRC will not accept that a property business is trading (HMRC’s Property Income Manualat PIM4300).

Recent First-tier Tribunal case of J Nott v HMRC (TC4897). It was held that furnished holiday accommodation did not constitute a trade, even when it included the provision of substantial additional services such as breakfast, daily cleaning and recreational facilities.

This case indicates the difficulties that taxpayers will have in claiming that property businesses are trades. There is no realistic prospect of rollover relief on normal letting business claim.

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