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Interesting interactions
KEY POINTS
- A plethora of capital gains rates apply from 6 April 2016 depending on the nature of the gain.
- A higher rate applies to residential property but how is that defined?
- Residential property appears to depend on suitability for use as a dwelling.
- A commercial property that could be easily converted to residential might attract a higher rate of tax.
- Care may be needed regarding the allocation of entrepreneurs’ relief.
Under the heading ‘Capital gains tax rates and annual tax-free allowances’ and referring to the tax year 2016-17 HMRC’s website states:
‘The following capital gains tax rates apply (the tax rate you use depends on the total amount of your taxable income so you need to work this out first):
- 10% and 20%...
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