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Divide and rue
A, B, and C are trading in partnership and control an associated service company. They jointly own the property from which the business trades and they lease the first, second and third floors (75% of the total area) to the service company for £90,000 per annum and this is a commercial rent. Other third-party tenants rent the ground floor, which is 25% of the total floor area of the building, for a rent of £90,000 per annum.
Divide and rue
A, B, and C are trading in partnership and control an associated service company. They jointly own the property from which the business trades and they lease the first, second and third floors (75% of the total area) to the service company for £90,000 per annum and this is a commercial rent. Other third-party tenants rent the ground floor, which is 25% of the total floor area of the building, for a rent of £90,000 per annum.
The partnership has received an offer for the entire property. Is business asset taper relief of 75% available on the total gain? Or is the gain divisible between the business (upper floors) and rental property (ground floor)?
If divisible, is it on the basis of space occupied or rent received? And would it make any difference if, instead of the owners letting it to the service company and the ground floor tenants, the whole property was rented to the service company, which sub-let the ground floor to those tenants?
(Query T16,541)
