PKF's warning to commercial landlords
People selling commercial property are being urged by accountants and business advisers PKF (UK) LLP to speed up the sale process in advance of changes to Capital Gains Tax in April 2008.
Peter Harrup, tax specialist (pictured) and partner at the firm's Ipswich office, says as the 5 April deadline approaches when the effective rate of Capital Gains Tax rises from 10 per cent to 18 per cent on some properties, buyers are highly likely to negotiate the price down.
"The nearer you get to the deadline the more likely it is that purchasers will hold sellers over a barrel and try to do a last-minute cut-price deal," he said.
For example, landlords letting commercial property to qualifying trading companies can currently pay tax at an effective rate of 10 per cent if they acquired it after 5 April 2000. This will increase to 18 per cent after 5 April under new proposals.
The savings could be even greater where landlords owned the property before 1998, as they are currently able to claim an inflationary increase to their costs, known as indexation. This is to be abolished after 5 April.
"My best advice is, ensure you have the right support from your tax advisers and legal advisers. At PKF we understand all the tax implications and are advising a number of clients as to the optimum time to sell property to reduce their tax liability."