06 April 2006
Our client ran a small hotel/guest house as a sole trader for just over three years and on sale made a net capital gain of £135,000. With full business asset taper relief the tax is around £10,000. However, if we claim main residence tax relief on the 3/11ths that was occupied by our client and his family, the capital gain on the balance is calculated as a mixed-use asset, with taper relief at only 5% on 3/11ths of the gain after main residence relief. This increases the tax to £20,000.
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