Ari Silver

Can I add to Philp's query above - the self assessment Capital Gains tax account only asks how much of a property is owned, and the sahare of market value when giving it away. What does one enter if you own 100% of a property, but only gift 50% away? eg Do you fill in the form as if you only own 50% of the property, as that is what is being given away, if gifting half rental to an offspring? Thanks

Many thanks for the reply. I think the value would be £455K based on the figures rather than £425K? However, when B inherited in 2019, the Form A restriciton was removed and he inhertied it as joint tenants with his wife A, so presumably the calculation, as joint tenants to sole owner, would be 50% of the 2019 value pkus 50% of the 2023 value, to get to the purchase price? Which would give a purchase price of £470K - so a gain due of £10K. Gifting half then means a gain of £5K. Does this sound correct? And please could you confirm that the fees and annual allowance would be taken from the £5K, rather than taking it from the full potentail liability of £10K first, and THEN dividing by 2? So, 24% of £1,190? (£285.60 total CGT)? Thanks!

- sorry, and then it's 24% of that £1,190 that then needs to be paid to HMRC? And would the fees for the transfer be taken from the £5,000, as it's the cost of the entire transaction, or from the £10,000, as only half is being gifted?

I'm trying to work out the amount of CGT liable on a gift of a half share of a buy to let, and how to calculate the liability. Mother and her daughter (A) owned a flat as tenants in common. When the mother died in 2019, the property was inherited by/went into the names of the daughter (A) and her husband (B), as joint tenants. So the husband B inherited half of the buy to let in 2019. Property was then valued at £500K. In 2023, A died, leaving her half to her husband B. So B then inherited the other half. Valuation at time of the 2nd 2023 probate was £440K. - so had gone down. No in 2024, B wishes to gift half the property to his daughter, to hold as joint tenants. So, 50% share each. A red book valuation ahs been taken of the current value, and that is saying £480K. So, in between the two values. Transfer/legal fees been £810, and none of the £3K CGT allowance has yet been used. Upper rate tax-payer. Bearing all the above in mind... would I be right in thinking that despite the 2nd probate valuation on the death of the wife (A) was irrelevant for IHT purposes as the husband inherited her estate, and was an estimate, nonetheless that must be taken into account for the inheritance of the second half? Therefore the calculation would be: 50% of £480 less 50% of £500K for the first half (= a CGT liability of MINUS £10K) plus 50% of £480K less 50% of £440K (= liability of £20K) So, £10K. Then he's only gifting half, so that would be £5K liability. Then deduct the £810 fees and £3K allowance, leaving a CGT liability of £1,190 to be paid. Would this be right? Thanks very much for any help!

Thanks - the guidance doesn't explain when the FHL business began though, for the 2 year BADR criteria. One HMRC rep on here said it's from when the deision was made/work began to turn it into a FHL. Is that correct?

Thank you for the reply. Regarding the current tax rules though, could you confirm if the following is correct? "In the case where an individual has one property that is let as a holiday let and decides to stop letting and sell the property, relief will be available where: 1. the property was used as a FHL at the time that the FHL business ceased; 2. the business was owned by the individual making the disposal for a period of two years immediately prior to the cessation of the business; and 3. the disposal takes place within three years of the cessation." - where selling the property can also be where it is gifted, and where the criteria for 1.) is that it meets all FHL requirements in the year up to that selling or gifting?

Reading the HMRC guidelines, there seem to be two different eligibiltiy tests: One to qualify as a Business that's entitled to BADR: it must be owned for 2 years or over up to the date of disposal of the company, & One to qualify as FHL - it must meet the 3 requirements for just 1 year to be eligible as a FHL: either 1 year from the first letting, the tax year, or the year up to the date of disposal. I've seen an advisor state that the starting point for the 2 year period can be when the decision was made/work began in setting up a property as a FHL (or eg when purchased). If a FHL has been owned /run as a FHL over 2 years by date of disposal, and has also met the FHL requirements in the last 1 year up to that point & from date of first letting (but not for 2 whole years, or the last tax year), does it still meet the requirements for BADR after that 2 year period? In other words, are the minimum periods for "Business" eligibilty (2 years of ownership by sole trader) and "FHL" eligibily (3 conditions met in relevant qualifying year) are different, as some of HMRC answers seem to suggest?

Further to the previous post... if the actual *decision* was made at the end of January 2023 to turn it into a FHL, and work began on it from that point, would that be the start of a 2 year period? IE if passing the property on to my son end of January, it would have been owned as a business for 2 years by then? With first year of letting (august 23 to august 24) satisfied the 3 requirements for FHL, as well as the last year of trading (Jan 24 to Jan 25 - up to the point of disposal) ?

In January last year (2023) after my wife's passing I asked my son if he would set up our holiday home as a FHL. He and his wife started work on the following month (a big task as we'd had it for may years as a second home). It was advertised from July with first bookings in Augst of last year. July to July (1st year of trading?) met the FHL criteria. This tax year April 6th 2024 to April 5th 2025 will also have met FHL eligibiity. The new FHL tax regime comes in April 6th 2025. But am I right in thinking that on precisely April 5TH 2025, the property will have met FHL requirements - 2 eligible years (the first being the 12 months from first booking, the 2nd year the current tax year)... and as one HMRC representative said on here, the "ownership" of the business was from the decision to turn it into a FHL/when work started to make that happen? - so that would also meet the 2 years of ownership? If so, were I to make a gift of the second home to my son, exactly on April 5th 2025 (so, on the day itself that it would hopefully qualify, but not the day after when the new tax regime starts), that that gift would then meet the criteria for either BADR or CGT holdover relief, and that could then be claimed after? I realise the timing is tight but from what I've read from advisors on here suggests this might be the case, so worth asking!