Readers' forum : Gain on letting

I should be grateful for readers’ advice on the capital gains tax treatment of property. Initially my client purchased a house as a buy-to-let and it was rented out for the first two years as a residential letting. However since then – for the past three years – the client has let the property as a serviced furnished holiday let.

The property was bought for £240 000 and was worth £290 000 three years ago when letting switched to furnished holiday letting. My client estimates that the house is now worth about £410 000.

The client is considering selling the property. Would the £170 000 gain be time apportioned and taxed at 10% for the period that it was operated as a furnished holiday letting? I assume that normal capital gains tax rates will apply for the earlier period. Alternatively could the property be treated as introduced...