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Answered in 1 hour by:
8/24/2010
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 16,712
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
VerifiedHi.
I don't see a problem in dividing the land into lots which are then sold separately in different tax years to achieve more CGT exemptions and to ensure that more of the gains are taxable at the lower rate of CGT. However, I'd advise you to take advice from a land agent, solicitor and a local accountant to look at the entire property to ensure that this can be done both practically and legally. I've dealt with a few farmers who've fallen foul of local byelaws preventing the breakup and sale of a piece of farmland.
A gift of a share to a spouse will work to achieve an extra £10,100 CGT exemption and, depending on the recipient spouse's income, may ensure that more of the gain from a sale is taxable at 18% instead of 28%. You would need to ensure that all the shares are appropriated before you split the land into separate lots for sale.
If your income including the taxable part of any gain is £43,875 or less then the gain will be taxable at 18%.
If your income excluding the taxable gain is more than £43,875 then the gain will be taxable at 28%
If your income excluding the taxable gain is less than £43,875 but the taxable gain pushes you over £43,875 then part of the gain will be taxable at 18% and part at 28%.
Let me know if you have any queries.
I don't see a problem in dividing the land into lots which are then sold separately in different tax years to achieve more CGT exemptions and to ensure that more of the gains are taxable at the lower rate of CGT. However, I'd advise you to take advice from a land agent, solicitor and a local accountant to look at the entire property to ensure that this can be done both practically and legally. I've dealt with a few farmers who've fallen foul of local byelaws preventing the breakup and sale of a piece of farmland.
A gift of a share to a spouse will work to achieve an extra £10,100 CGT exemption and, depending on the recipient spouse's income, may ensure that more of the gain from a sale is taxable at 18% instead of 28%. You would need to ensure that all the shares are appropriated before you split the land into separate lots for sale.
If your income including the taxable part of any gain is £43,875 or less then the gain will be taxable at 18%.
If your income excluding the taxable gain is more than £43,875 then the gain will be taxable at 28%
If your income excluding the taxable gain is less than £43,875 but the taxable gain pushes you over £43,875 then part of the gain will be taxable at 18% and part at 28%.
Let me know if you have any queries.
You'd need to speak to a property lawyer about gifting fractional shares other than a half and the paperwork required to show the ownership but there is nothing in tax law to stop you doing that.
The new ownership structure needs to be in place before the lots are sold. As long as it is, then you shouldn't have a problem.
The new ownership structure needs to be in place before the lots are sold. As long as it is, then you shouldn't have a problem.
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 16,712
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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