JessandMat

Many thanks and well noted!

Thanks for this Mr Punter, that's really helpful. We could bring in family labour to do some of the work, my dad is a tradesman but doesn't live locally so wouldn't be straight forward! We're also quite handy but this sort of labour will slow it down too.... The figures we've done show potential profit as more than twice as much if we develop the property - the neighbour's ownership makes it more complex as we're splitting profit. We may be underestimating how much someone will pay for the land - think we may test the market to see and that may make the decision for us! Re connections - we don't need to do this if we sell the plot do we? Have some estate agents coming round so can check with them what we need to do etc as well. My mortgage broker has been really helpful so we've got an idea of how to work with the lender - although they seemingly want to know before we build (let alone sale). Also spoken to a solicitor re separating the land titles and it seems this can happen once we have a seller - be that for the land plot or a built house! Thanks again!

Hi, we're in a similar position to this. We have planning permission hopefully coming for a small property in our garden - to complicate things it's a project that needs part of our garden and part of our neighbour's garden (who isn't UK resident for tax purposes). We've spoken to some accountants and the general consensus seems to be to do a tax return and we won't pay tax on the land with planning permission (our plot is under half an acre and land is currently used as a garage where our bikes are stored). However if we build the property ourselves it seems we would make more money, at least on paper, but it looks like we would pay income tax on the profit. I'm not working currently so have some tax allowance, my other half is a higher level tax payer. (FYI we're not married). One accountant suggested putting the land into a company but drawing dividends etc seems problematic. Another option is to live in the property we build, although it's smaller than we'd like. We seem to think 3 years is the time period we need to be in it for but i'm not sure there is a specific time period. We would either retain the other property, which is being renovated at the same time and rent it out during that time. Possibly moving back in in the future. So income tax would be payable on the rental income during that time. And a portion of CGT for the period we don't live in it when we do eventually sell. (With some grace periods I think). Or we could sell it when we move into the smaller new build with no CGT etc payable as it would benefit from PRR at that point. (Which would be easier as we don't have all of the cash to develop both at the same time so we may need to sell the main house to fund the new build!) If we move in to the new build we should get the VAT exemption too. (We don't have CIL payable locally). My question is.. have we understood this all correctly, it seems very complicated and the above doesn't address that this is all being done with a neighbour? Are there any hidden expenses like connection to water etc charges we're missing as part of the new build project that make it less attractive? Also, where does the land value sit - we can't just split the plot to build on from the garden from the main house can we; somewhere in the above there will be some SDLT/CGT etc to pay, but where does it sit? We do need specialist tax advice but I'm struggling to speak to someone with this sort of experience; any quotes I've had are also for a few thousand pounds which seems a lot to pay at this stage (albeit may be worth it in the long run to get the tax right!)