buying out our friends share of our holiday home

we bought a house in ibiza with another couple 14 years ago due to ill health our freinds now want us to buy them out what is the cheapest way of doing this bearing in mind there will be quite a considerable capital gain

First thing you want to do is get a couple of estate agents to give you a valuation...then go and see a good lawyer to buy the others out ...just like you would when having a divorce.

If the scenario becomes a forced sale situation the property would be worth considerably less than estate agents usual made up Mickey Mouse best guess and hope price. Get a chartered surveyor to give you a forced sale (auction price).

Get an idea of what the property is worth from an estate agent , but consider that buying half a property may have less value than 50% of the property being sold 100%.  Who would normally buy a 50% share ?    Just a thought which might save you some money

From what you say it would be an amicable transaction.  Having agreed  a price, go with your friend to a notary, explain what you require and make an appointment.  They will draw up the contract.

I see no need whatsoever why you would need to pay a lawyer (to hold your hand) when you go to the notary before whom you must go to make the transaction whether you have a lawyer or not.   You have part owned the property for 14 years so you are not going to find any unexpected surprises.

The cheapest way for whom? The capital gain will be your friends' issue; the transfer tax on their half share will be yours. The cheapest way for your friends would be to under-declare (making sure you don't declare less than the tax authorities would accept) thereby minimising their CGT. Assuming you trust each other (and always remembering that money can destroy friendships if you're not careful), you can bung them the rest of the agreed price in cash. However, doing this, whilst also minimising your transfer tax on the purchase of their half, also potentially puts you in a situation of greater CGT liability in the future. Swings and roundabouts. 

Other than that, I agree with John: unless there's a lack of trust in the relationship, really no need to involve lawyers and their costs. Only other thing - are you absolutely sure you want to keep the place? Maybe now would be a good time to sell. Offering your friends less than 50% of what you might get on the open market makes sense on the one hand - on the other, it might just upset that friendship! Selling it and splitting the proceeds 50/50 ensures no disagreements over the "real" value.

If i was your friend, i'd take your 50% payment and leave the country with it. Let the bias fall into the consumer for a change. Robbing gets

That would solve nothing. I'm assuming the owners are all non-residents - so 3% of the agreed transfer price will have to be retained by the OPs anyway (in lieu of their friends' CGT liability) which they will be obliged to pay to Hacienda. And they will still have to pay the transmission tax on the share they are buying. I don't see any way of avoiding these facts if the transfer of ownership is going to be done legally.

Who would be liable for cgt?

Not sure what your question means really, but the obvious answer is: Anybody who makes a capital gain.

In this case, the OP stated there will be "quite a considerable capital gain". One would have to assume that the couple wishing to sell their share are the ones who will be making the gain.

My point is, would they get pursued for the gains in the UK?

Again, assuming that the couple selling their share are non-residents: the couple buying the other share will be obliged to retain 3% of the agreed transfer price and submit it to the tax department. This payment is in lieu of any capital gains tax liability of the seller arising from the sale. If the retained amount is greater than any tax due, the seller has the right to claim back the difference; if it is less than the resulting tax liability then in theory the tax office can pursue the seller for the outstanding amount, wherever in the world they may be resident. In practice, unless it's a significant amount, there's probably a good chance the authorities would not bother.

Either way though, the selling couple will have to give up 3% (of whatever price is recorded) at the time of the transfer of ownership. They would also be liable for plus valia (charged by the town hall). If they don't pay it, the town hall may well come after the buyers for it. Since they don't have the same access to shared information as tax agencies, they will almost certainly not pursue a non-resident overseas: far easier to lodge the debt against the property and it's new owners.

Death & taxes.....