Readers’ forum: Tax consequences of proposed gift of property

A director of a limited company in which she has owned more than 5% of the shares for at least two years owns a residential property that has been used by the company exclusively for the purpose of its children’s nursery business.

The property was purchased in 1997 for £150 000 and extended at a cost of £200 000. The current market value is £650 000. Until 2010 it was the director’s principal private residence and  it is intended to gift the property to the company. This will be a transaction between connected persons resulting in  a disposal for CGT purposes at market value and thereby realising a gain of £300 000. It is considered that holdover relief under TCGA 1992 s 165 will apply. This relief is restricted where an asset has not been used exclusively for business purposes throughout the period of ownership and so the...