CIL Exemption?

[ag1976]

Hi

 

I hope somebody can advise. I have just legally completed on a transfer of part and am about to put in a planning application on the land that I've purchased from my mother to build a new house for me to live in. I have a positive response to a pre application.

 

 

As It will be a self build I understand I will be exempt from CIL.
 

Ive been advised to have the titles separated before I put in my planning application.

 

My question is should I wait for the title I now own to be registered at land registry (which could take months) before I apply for planning or is legally owning the land enough for me to be exempt any CIL charges.

 

I hope this makes sense.

 

Thank you

 

Alex

[MikeSharp01]

Welcome to THE forum for people like us.

 

Someone will be along shorty who can answer IIRC you need to get your CIL exemption sorted before you start.

 

 

[Temp]

5 hours ago, ag1976 said:

Ive been advised to have the titles separated before I put in my planning application.

 

My question is should I wait for the title I now own to be registered at land registry (which could take months) before I apply for planning or is legally owning the land enough for me to be exempt any CIL charges.

 

Liability for the CIL only kicks in when you start implementing your planning permission. Until then the liability can be transferred to a new owner. So it's not really an issue.

 

The important thing is to get planning permission and then formally apply for the self build exemption using the correct forms and get it granted BEFORE starting ANY work on site. Note that the planners may tell you either verbally or in writing that it will be exempt BUT you must still formally claim the exemption or you loose it. 

 

Is the land part of your mother's garden? If not then you should buy the land BEFORE applying for planning permission. Otherwise HMRC may go after your mother for Capital Gains Tax on the full value with planning permission. Her garden is exempt from CGT but other land such as a paddock would not be. 

Edited November 18, 2021 by Temp

[ag1976]

24 minutes ago, Temp said:

 

Liability for the CIL only kicks in when you start implementing your planning permission. Until then the liability can be transferred to a new owner. So it's not really an issue.

 

The important thing is to get planning permission and then formally apply for the self build exemption using the correct forms and get it granted BEFORE starting ANY work on site. Note that the planners may tell you either verbally or in writing that it will be exempt BUT you must still formally claim the exemption or you loose it. 

 

Is the land part of your mother's garden? If not then you should buy the land BEFORE applying for planning permission. Otherwise HMRC may go after your mother for Capital Gains Tax on the full value with planning permission. Her garden is exempt from CGT but other land such as a paddock would not be. 

Thank you

The land is to the side of my mothers house. It involves knocking down a detached garage and we are also taking a part of the existing house and incorporating it into the new build. We are turning a semi detached into a terrace and building a semi? I don't think there would be any tax implications to my mother?

[ag1976]

1 minute ago, ag1976 said:

Thank you

The land is to the side of my mothers house. It involves knocking down a detached garage and we are also taking a part of the existing house and incorporating it into the new build. We are turning a semi detached into a terrace and building a semi? I don't think there would be any tax implications to my mother?

Yes I have bought the land without any planning permission. I assume this is ok?

[Temp]

1 hour ago, ag1976 said:

The land is to the side of my mothers house. It involves knocking down a detached garage and we are also taking a part of the existing house and incorporating it into the new build. We are turning a semi detached into a terrace and building a semi? 

 

Not quite sure I follow that. 

 

Bear in mind that a new build is only zero rated for VAT if all existing buildings on the site are demolished. In some cases this can make it worth demolishing and rebuilding existing buildings. Great for the Environment eh?

 

 

[ag1976]

Let me start from the beginning. I'm now worried my mother could be subject to CGT or if there might be any other high tax consequences.

 

My mother owns a semi detached house with a detached single garage to the side. 

 

I want to build a new house at the side of hers to live in with my wife and children.
 

Three years ago I bought some land to the side of her house for a nominal amount.

 

The land I bought including her garage and was about 3 metres away from the main house. 
 

Once I owned the land I put in a planning application to knock down the garage and build a detached house. This application was refused.

 

Afterwards we put in a planning application for an extension adjoining the existing house. This also involved knocking down the garage. This was approved. 

 

Then we put in a pre application to convert the extension and part of the existing house into a separate dwelling. We have a positive response from the planners.

I am about to complete on the additional parcel of land I need to allow for the new house. This includes the 3 metres in between the original land I bought three years ago and her main house. It also cuts through her main house as we are using some of the accommodation to incorporate into the new and separate dwelling.

 

When I complete the transfer of part and own the additional land I'll put in my application to separate the dwellings.

 

I hope this explains things more clearly and you understand my question if there would be any tax consequences.

 

Thanks  

 

Alex

[Temp]

If all of the land you are buying from your mum is part of her home/garden ("Principle Private Residence" in  HMRC speak) then there shouldn't be any CGT for either of you.

 

If some of the land you are buying from her isn't really part of her home/garden  (eg it's a paddock or agricultural or similar) then their might be CGT to pay.

 

This would/should be calculated on the value of the land not what you pay for it. The value could include any "development value"  that is its value based on its development potential. 

 

If you pay a lot below its market value then it's possible HMRC might see the difference as a gift. That could make it subject to IHT if your mother died within 7 years.

 

I'm not an accountant - this is just my understanding of the CGT and IHT tax position. I've mentioned VAT above.

[Temp]

A normal residential garage would be considered part of her home/garden.

[ag1976]

I paid mum £10,000 when we bought the original piece of land that we were refused planning permission on.

 

I am about to pay £10,000 for the additional 3 metre strip of land + the some of the land the existing house sits on where we will incorporate some of the existing accommodation into the new dwelling.

 

This new house could not be built without the land I originally purchased.

 

If we get planning permission I would expect the new house to be worth in the region of £600k and the original house to depreciate in value by about £100k as it would go from a semi to a terraced.

 

I assumed the new piece of land I buy won't have much value because without the original piece I purchased it has no value. Also, can land have value if planning permission hasn't been granted?

 

Thanks