I have a large house, a very large garden and a holiday cottage within the garden. The cottage is rented out as a furnished holiday let. These are for sale as a job lot, or alternatively I am happy to split the title and sell at the same time, as two separate sales. What are the tax implications? I think there is 10% capital gains tax on the cottage only. Is this correct and is it the case no matter which way I sell? 

Arthur Weller replies:  

The capital gains tax (CGT) rate for the house, garden and holiday cottage is 18% for a basic rate taxpayer and 28% for a higher rate taxpayer, because it is residential property. However, if you live in the house as your main residence, it is likely that a part (or even all) of the capital gain on the house and garden will be exempt due to principal private residence (PPR) relief. As for the holiday cottage, it appears that you have not lived in it but only rented it out. If so, PPR relief will not be available. However, if this is the only property that you rent out as a furnished holiday letting, and if you fulfil the conditions for business asset disposal relief, you could be eligible for a 10% CGT rate.