From 1977 to 2008, my father ran/owned the family business. From 2008 to present, he has leased it to me at a rental of £1,500 per month. I intend to expand the business, but before that my father intends to gift me the business. Its current market valuation is £250,000, and his other income for the year would be £20,000. Can you tell me what valuation figure should be used with it being owned prior to 1982, and the expected capital gains tax (CGT) payable this year?

Arthur Weller replies:
The capital gain for your father is the difference between its present market value, £250,000, and the March 1982 value. You will have to do your best to work out a valuation for March 1982. I would have said that he is eligible to entrepreneur's relief on the gain, meaning a CGT rate of 10% on the whole capital gain. But since your father has leased the business to you for the past eight years, from his perspective it is not his trading business, but an investment asset, and so is not eligible for entrepreneur's relief. So for any part of the gain falling below the higher rate threshold the CGT rate will be 10%, and the remainder will be taxed at 20%.