Capital gains tax on plot!

[gc100]

On 23/08/2020 at 09:40, Amateur bob said:

good morning just wondering if anyone has any info on this,

 

my dad is signing over a bit of agricultural land to me for a house plot the planning could be through any day now, due to hold ups with getting it transferred it may have outline planning on it by the time its transferred, this will increase the value to be transferred and im told my dad could then be liable to pay capital gains tax, is this true though?

 

The farm was bought or 250k about 30 years  ago and the plot hes gifting would be work mabye 100k, this is clearly less than the purchase price of the farm BUT its only a partial disposal of the asset so how does this affect things?

 

if im liable for tax is there anyway of holding over the tax on gifts? so that tax is only liable if i then sell the plot?

 

thanks

 

This is exactly what happened to me on my dads farm. I warned him that he should gift it to me before I achieved planning, but was insistent (and his accountant) that we would not be liable for CGT. However the long and short of it (I called HMRC and source professional advise), the plot when gifted after planning is achieved significantly increases the CGT due - which IS due.

 

Sorry to be bearer of bad news. I just went through this last year. 

 

I would do everything you can to delay getting planning or get it gifted before

 

Edited August 24, 2020 by gc100

[Mr Punter]

There could be quite a lot of money at stake here and so the OP should seek professional advice rather than rely on the opinions of unqualified forum members.  Perhaps he can come back to update the thread when he has been so advised, for the benefit of others who have similar situations.

[Amateur bob]

1 hour ago, gc100 said:

 

This is exactly what happened to me on my dads farm. I warned him that he should gift it to me before I achieved planning, but was insistent (and his accountant) that we would not be liable for CGT. However the long and short of it (I called HMRC and source professional advise), the plot when gifted after planning is achieved significantly increases the CGT due - which IS due.

 

Sorry to be bearer of bad news. I just went through this last year. 

 

I would do everything you can to delay getting planning or get it gifted before

 

did the farm purchase cost count for nothing in the calculations then? how much tax roughly would i be due? the planning is in for outline planning not full planning, thanks

[Amateur bob]

does anyone know how to delay the planning?

[Wagas]

What are the hold ups in getting it transferred? Has your Dad completed the transfer of ownership form TP1? https://www.gov.uk/government/publications/registered-titles-part-transfer-tp1

 

It's the date on the TP1 that matters not when the transfer is actually completed. So just sign the form now? Or get proper advice.

 

CGT is payable regardless if it's a gift or for money but there will be a lot less CGT, possibly nothing, before PP.

[Wagas]

Not sure why you went ahead with planning application when you asked the same question last year 

 

[Amateur bob]

20 minutes ago, Wagas said:

Not sure why you went ahead with planning application when you asked the same question last year 

 

The lawyer told us just to push on with it but then spoke to the accountant recently and he says it would have been better to sign it over before getting planning but MIGHT be able to get hold over relief

[Amateur bob]

25 minutes ago, Wagas said:

What are the hold ups in getting it transferred? Has your Dad completed the transfer of ownership form TP1? https://www.gov.uk/government/publications/registered-titles-part-transfer-tp1

 

It's the date on the TP1 that matters not when the transfer is actually completed. So just sign the form now? Or get proper advice.

 

CGT is payable regardless if it's a gift or for money but there will be a lot less CGT, possibly nothing, before PP.

The hold up just now is the deed plan lawyer is drawing up for the plot they need details of where to connect water etc which im working on!

[Wagas]

I've never encountered having to put water connection on a deed plan for TP1...

 

The Land Registry should go off the date used on the TP1 as the transfer date so as long as you have already completed, signed and dated the TP1 you should be fine regarding CGT pre planning. But as mentioned previously take professional advice...

[recoveringbuilder]

40 minutes ago, Amateur bob said:

The hold up just now is the deed plan lawyer is drawing up for the plot they need details of where to connect water etc which im working on!

You don’t need this, I have twice split a title and have never been asked for water connection point 

[scottishjohn]

3 hours ago, Wagas said:

I've never encountered having to put water connection on a deed plan for TP1...

all you need to do is have a clause to allow for service connections  later

[gc100]

19 hours ago, Amateur bob said:

did the farm purchase cost count for nothing in the calculations then? how much tax roughly would i be due? the planning is in for outline planning not full planning, thanks

 

Yes it did but farm land is cheap compared to the land with building permission . Land is max 10K per acre for farm land around here, building plots up to 300K per acre.. So that only knocks off 10k of the calculation.

Edited August 25, 2020 by gc100

[scottishjohn]

30 minutes ago, gc100 said:

 

Yes it did but farm land is cheap compared to the land with building permission . Land is max 10K per acre for farm land around here, building plots up to 300K per acre.. So that only knocks off 10k of the calculation.

and the valuation will need to be done by a surveyor --more expense

your guess will not keep HMRC happy

Edited August 25, 2020 by scottishjohn

[Amateur bob]

1 hour ago, gc100 said:

 

Yes it did but farm land is cheap compared to the land with building permission . Land is max 10K per acre for farm land around here, building plots up to 300K per acre.. So that only knocks off 10k of the calculation.

you must be in a good arable area, did you have to get an ag tie on your house?

[gc100]

no

[Amateur bob]

ive been turned down so dont need to worry about capital gains for now, the next issue is putting in planning with agricultural justification and getting a mortgage with a tie on it IF it passes