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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: UK Tax
Satisfied Customers: 3859
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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I have received 90k compensation on 10acres of my 108 acre

Customer Question

I have received 90k compensation on 10acres of my 108 acre farm vested for a new road.The ten acres have been professionally valued at 15K at 31/3/82.How is the Cap.Gains tax worked out if I received the comp.in the 2012/13 tax year and how much will I have to pay and when?
Submitted: 1 year ago.
Category: UK Tax
Expert:  PDtax replied 1 year ago.

PDtax :

Welcome to the site. I will be helping you today. To Q & A format...

Expert:  PDtax replied 1 year ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Expert:  PDtax replied 1 year ago.
I'm sorry, I didn't see this was a UK question until I changed to the Q & A format. I will opt out so that a UK tax expert can assist.
Customer: replied 1 year ago.

So what happens now. Will someone else pick up my question and provide an answer, for the fee that I have already paid?

Expert:  annelew12554 replied 1 year ago.
Different expert here.

I have asked that this question be moved to the UK tax category.. Please do not answer this posting as it will only delay the process.
Expert:  Rakhi Vasavada replied 1 year ago.
Dear Friend,

Hello and welcome.. Thank you for using Just Answer.

The professional valuation of your land at 15k for 10 acres of not of relevance. This values your land at 1500 per acre, whereas you have received 90k for your 10 acres.

The compensation that you have got is 9000 per acre as against 1500 per acre as that is its professional valuation.

Given this, the your capital gains liability would be calculated on the ACUTAL money that you have received. That is, on 90,000

The CGT liability would be 90,000 - your basis and the CGT would stand payable on that.

The following is the link to land compensation manual

http://www.voa.gov.uk/corporate/Publications/Manuals/LandCompensationManual/sect4/26b-lc-man-s4.html


This is how you will work out your capital gains tax liability.

http://www.hmrc.gov.uk/cgt/property/calc-cgt.htm#7


These are the rates.

http://www.hmrc.gov.uk/rates/cgt.htm#2


I am sure this would help.

Please leave a positive rating if this helps. Alternatively feel absolutely free to revert with further queries if I have missed out on any aspect of your question and I shall be more than happy to keep assisting you.

Warm Regards
Customer: replied 1 year ago.

sorry, I didnt think you answered my question satisfactorily, I had requested a tax calculation,an expected Capital Gains Tax amount to pay, and the due date to pay it.Can you supply these details or withdraw,allowing someone else the opportunity to supply them.

Expert:  Rakhi Vasavada replied 1 year ago.
Dear Friend,

Hello and welcome again and thank you for your follow up question. Let me throw some light on steps you take to calculate capital gains and also calculate capital gains for you.

To begin with, you would following the following steps. While calculating your capital gains, I would presume that you do not have any other gain of this nature.

In most cases:

  1. You add together all of your gains for that tax year.
  2. You add together all of the allowable losses you've made for that tax year.
  3. You deduct the losses from the gains to work out the overall net gains or losses.
  4. If the overall net gains are below your annual tax-free allowance (known as the 'Annual Exempt Amount'), there's no Capital Gains Tax to pay.
  5. If the overall net gains are above the Annual Exempt Amount, you deduct unused allowable losses from a previous tax year. Deduct enough to reduce your gains to the Annual Exempt Amount. You can carry the rest forward to future tax years.
  6. If you have overall net gains work out which Capital Gains Tax rates apply and how to use your tax-free allowance. For 2012-13 Capital Gains Tax is charged at 18 per cent or 28 per cent for higher rate tax payers. Gains qualifying for Entrepreneurs' Relief are charged at 10 per cent.
  7. If you have gains chargeable at different rates, deduct the Annual Exempt Amount in the way which minimizes your tax due.

Coming to your probable tax amount, in most case, like yours, The value on which the gain (or loss) is based is normally the consideration received. However, on gifts and certain sales, the open market value is used instead.

 

So, it would be 90,000. On this 90,000 you will deduct any other costs that you have incurred while disposing of the assets, and after than you will add or deduct ( as the case may be) any other capital gain or loss that you have.

 

By this, you will reach at net amount chargeable to capital gains.

 

Having done this, you will deduct annual exempt limit,

 

The Annual Exempt Amount for the tax year 2012-13 is: £10,600 for each individual


So, deduct 10,600 from the net amount chargeable to capital gains. On this amount, you will pay:

==>A flat rate of 18% for any chargeable gains that fall within the basic rate band of income tax.

OR

==>A flat rate of 28% for any chargeable gains that fall within the higher rate band of income tax.

DO NOT rate negative, if this does not help. Tell me so and I shall opt out of this.

Please leave a positive rating if this helps. Alternatively feel absolutely free to revert with further queries if I have missed out on any aspect of your question and I shall be more than happy to keep assisting you.

Warm Regards

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