Capital Gains Tax and Property Purchase

When the changes to Capital Gains Tax (CGT) were announced the directors of Algebra (one of South Wales's leading suppliers of office equipment) asked Castle Court Consulting to look at the implications for them in the way they owned the property from which the company traded.

The property was owned by a separate business and the directors were insistent that any strategy Castle Court provided had to allow them to continue to benefit from rental income and future capital growth.

We carried out some tax calculations which showed that their liability to CGT would increase substantially under the new rules which were coming into force in April 2008.

Castle Court Consulting devised a strategy for Algebra which allowed the directors to utilise current pension funds enabling the directors to sell the property, crystallise the CGT under the old regime and yet still have the property from which to trade. The strategy also meant that the directors still enjoyed the benefit of ownership themselves.

By selling the property to the pension scheme the directors would continue to get the required rental and capital growth benefits of commercial property ownership, but now this was in a tax free environment.

Ian Eidman, director of Algebra said "The planning advice we received from Castle Court Consulting was very comprehensive and they met our requirements and implemented the agreed strategy in a highly professional manner."

Castle Court director Andy Booth said "By bringing our highly experienced tax planning and financial planning teams together we were able to provide Algebra with the flexible solution they required. Whilst behind the scenes implementing such strategies can be complex it is very rewarding to deliver a successful solution to a client."