Buying a Business Property? Then don't forget the taxes!
Buying
a business property involves several important taxation decisions.
In broad terms 'a business property' is one that is used by
a business rather than for living in.
Stamp Duty
Stamp duty is the first tax to consider since this
is a major additional
cost when buying a property.
The current rates, due on the
cost, are:
Value |
Stamp duty |
£0-£150,000
|
Nil |
£150,001 - £250,000
|
1% |
£250,001 - £500,000 |
3% |
Over £50,0000 |
4% |
VAT
When buying a business property you might be charged VAT
at 17.5% on the
full cost of the building, which can be a significant extra
cost. It
might not be possible for you to claim all this back in one
go because
of the rules of the Capital Goods Scheme. Where VAT is charged
you will
need specialist help to work out how much VAT is due and if
it can be
claimed back.
Capital gains tax
There is no capital gains tax to pay when you
buy the property but you
do need to consider it since it can be levied on the sale of
the
property. For most, the decision will be between whether a
company or an
individual will own the property. In the 2006/07 tax year an
individual's first £8800 of capital gains are exempt
from taxation which
is not the case for a company. The ownership of the property
is,
therefore, an important aspect to cover. If the individual
buys the
property they will usually charge rent to the business, as
any
commercial landlord would do.
In summary, you should never buy
a business property without taking full
and detailed tax advice since any error could be very expensive.
If you have any queries about any of the issues raised here
or
how Appletons Accountants can help on any other business issue,
please call us on 01625 260990 and we will
be pleased to help.
