Property Investing And Capital Gains Tax In A Limited Company


Louise Misiewicz

Tax Consultant

5th June 2013

Posted by Simon Misiewicz on 5th June 2013

Are you buying properties and letting them out?

Are you using a limited company to shield yourself from CGT?

I hate being the bearer of bad news but I have some right now.

Case Law: Elizabeth Moyne Ramsay v HMRC

Mrs Ramsey had transferred her rental property into a limited company to shield herself from high tax rates. The profit made on the property as a result of the limited company buying from her was put into shares within her limited company (1). Therefore she was trying to claim Business Property Relief (BPR), which I will describe later.

HMRC did not agree and have won in their case, therefore Mrs Ramsey has to pay the tax due on the capital gains. Wherever a property is put into a limited company it does not satisfy itself for CGT relief or BPR as it is considered an investment (1).What does this mean to property investors?This means that assets which are property related but are not used as trade cannot avoid CGT. The following types of properties avoid CGT and can claim Business Property Relief (BPR) but no others. For example, land and buildings must be occupied as well as used for your trade.

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(1) Capital Gains Tax – Rented Property in a Limited Company

(2)Capital Gains Tax Reliefs For Business Assets

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