CGT - disposal of Furnished Holiday Letting w subsequent share purchase

SSSowmya Srinivasan8y ago

Hi! I was doing a question from the LSBF revision kit that stated: "In Jan 2011, Marion bought a cottage which she immediately let out as furnished holiday accomodation. In Sep 2016, she sold the cottage and realized a gain of 53,100. She reinvested the proceeds in a share portfolio. Marion is a higher rate taxpayer but had made no other capital gains in 16/17. How much CGT is payable by Marion assuming she makes any beneficial claims?" The answer stated that Marion could claim entrepreneur's relief on the disposal of the furnished holiday accommodation since she'd owned the furnished holiday let for at least a year. However, isn't entrepreneurs relief given on the cessation of a business and when substantial amount of business assets are sold? How come a furnished holiday letting is allowed to have entrepreneurs relief? Is this because of the tax benefit of furnished holiday lettings being taxed like the business in the sense they can claim capital allowances, etc?

TTTax Tutor8y ago#1

Entrepreneurs relief cannot indeed be claimed when there is merely a disposal of an asset used in a trade, there must be a disposal of a business, but a furnished holiday letting does represent a business in its own right - there is income, there are expenses and there will be either a profit or loss - this is a business! Hence entrepreneurs relief is available when such a property is sold