Darling's capital gains tax U-turn benefits GPs

GPs selling premises or shares in them face significantly lower tax bills than was threatened by government.

GPs selling their surgery premises or shares in premises on or after 6 April will not be hit as hard as expected by proposed revisions to capital gains tax (CGT) thanks to a concession for entrepreneurs, according to accountants.

Last week chancellor Alistair Darling responded to criticism of the 18 per cent CGT rate and an end to business taper relief announced last autumn by proposing a 10 per cent rate on gains of up to £1 million for small businesses from 6 April.

Laurence Slavin, partner with Ramsay Brown and Partners, said that with a CGT of 18 per cent, a GP selling a surgery for £225,000 after 6 April which was bought in 1982 for £70,000 would mean a CGT bill of £25,794. The 10 per cent entrepreneur's rate will reduce the tax to £14,330 - a £11,464 reduction (see box).

Mr Bob Senior, director of medical services at specialist medical accountants Tenon's, said: 'The changes will be welcomed by many GPs approaching retirement since for many the £1 million limit will mean they will be facing a maximum tax rate of 10 per cent on their gains.'

He added that any GP who owned their surgery before 5 April 1998 would currently benefit from an indexation allowance and business taper relief resulting in less than the 10 per cent capital gains tax.

'The changes are therefore better than the original proposals but not as good as it has been,' Mr Senior added.

'The position for those GPs who have already retired but continued to own their previous surgeries as an investment needs to be looked at carefully. There is a risk that the gain on the disposal of premises in those circumstances might not be covered by the new £1 million exemption.'


Capital gains tax change
Sale before 6 April 2008
Sale proceeds: £152,500
Gain after indexation: £96,350
Taper relief: £72,263
Gain after taper relief: £24,087
Annual exemption: £9,200
Gain liable to CGT: £14,887
Tax at 40 per cent: £5,955
Sale after 6 April 2008
Sale proceeds: £152,500
Annual exemption: £9,200
Gain liable to CGT: £143,300
Original proposal, tax at 18 per cent: £25,794
Increase in tax: £19,839
New proposal, tax at 10 per cent: £14,330
Increase in tax: £8,375
Source: Ramsay, Brown and Partners

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins


Already registered?

Sign in