Stamp duty

[Matt1455]

Few questions 

firstly I'm getting gifted a portion of agricultural land with a barn on it with a rough valuation of £20k I also have my main home would I need to pay stamp duty. 
 

and secondly if we don’t and we keep our main home and convert the barn under class Q into a dwelling and it’s valued at the end for £400k let’s say would I need to pay stamp duty. 
 

 

[IanR]

If it is truly gifted, and no money is changing hands, then no Stamp Duty is owing.

   There could be CGT owed by the person gifting you the property, based upon the notional value (£20K you say). If the current owner used it as part of a working farm there should be some level of CGT relief. Lot's of rules around this, definitely best to take advice.

   The "gift" would also incur Inheritance Tax if the gifter was to die within 7 years. Look up the PET rules, as there is also relief on this, over time.

 

I'd suggest a professional valuation before it's gifted and before any Planning Application/Class Q is submitted.

 

Once developed/converted, there still wouldn't be stamp duty owing, but there would be Capital Gains Tax owing and possibly CIL (owing at the start of development).

 

If it became your primary residence, once developed, it may become exempt from CGT, but you need to be carful about the timing of the sale of your existing property, to ensure that also remains exempt from CGT. If you develop/convert for a house for yourself, and live in it for 3 years minimum, it may also be exempt from CIL, but you need this agreed before you put a spade in the ground.

[nod]

As above 

I would get a valuation 20 with an end value of 400 sounds very low You will struggle to get around capital gains 

 

A few years ago I helped develope a barn into two dwellings The farmer had gifted them to his daughter and son But was told he would be liable for tax on the end value 

[Dave Jones]

first talk to an accountant not a forum for tax advice.

 

20k gift, declare it and pay the roughly £3k tax depending on your tax bracket.

 

Get permission build and complete, move in. its now your primary residence and exempt from capital gains. sell/rent old house also exempt from capital gains.

 

dont pay the tax now and maybe the tax man can come after you in future for a share which will be much more than a couple grand now.

 

 

[Temp]

On 19/09/2023 at 23:28, Matt1455 said:

and secondly if we don’t and we keep our main home and convert the barn under class Q into a dwelling and it’s valued at the end for £400k let’s say would I need to pay stamp duty. 

 

+1 on seeking advice because I think there are special/different tax rules and relief on agricultural land in family ownership.

 

I don't think you will pay second home stamp duty as you aren't "buying" a second residential property only agricultural land/buildings. 

 

Note that for class Q the building has to be in agricultural use. I wonder if the council might try arguing that once transferred to you the land its too small to be a farm therefore the building cannot be in agricultural use? It might be worth getting class Q approved before transfer to you but that might increase CGT for the person gifting you the land. Might be worth speaking to a planning consultant to see if theses concerns are valid.

 

Certainly don't go removing any evidence of agricultural use. Note that storing cars or household items is also not agricultural use so some tidying up might be in order. Some councils go to great lengths checking old satellite photos etc for evidence of use if they don't want it converted. Other councils are much more relaxed.

 

If you inherit or buy a plot and build a house or convert a building there is no stamp duty payable. That woukd only be payable on any future buyer if/when you sell it.

 

Note that the Self Build VAT reclaim scheme is only available to people building/converting houses for themselves or family to live in not when building houses to sell for profit.  

 

Watch out for the CIL. You might be exempt but only if you formally apply for the exemption in advance and meet the rules. 

 

 

 

 

[Matt1455]

On 19/09/2023 at 23:47, IanR said:

 

 

thanks for all the advice on this. 
 

I’ve spoke to an accountant and basically I won’t owe any stamp duty what so ever duty to the land being gifted with no planning it’s value at next to nothing.

 

capital gains tax I won’t have to pay only when I sell if it’s not my main residence. 
 

if I get away with planning permission I’m laughing.