Advice please regarding tax on parcel of land

Andrea2528

Hi,


I am in the process of completing a tax return. I would like some advice please. I sold a 4 acre parcel of agricultural land last year and would like to know if I am subject to any tax on that? The field was bought by my family in 1978 and placed in my name at that time. If I am due to pay any capital gains tax, please would you advise me regarding how to calculate that?


Thanks

eskbanker

You need to identify what the purchase price was and deduct that from the sale price to give the capital gain figure. You then have a £12,000 allowance and have to pay Capital Gains Tax on anything above that.

The process is explained at https://www.gov.uk/capital-gains-tax

Andrea2528

My parents bought it and placed it in my name but I don't know how much he paid for it. It's a parcel of land that forms part of my farm land.


Thanks

eskbanker

If you can't ascertain the 1978 value then you'll have to treat it as zero for CGT purposes, which would obviously increase your tax bill (assuming the sale realised more than £12K).

If there's no available paperwork covering the original purchase then other avenues potentially worth exploring include the solicitors involved or a land registry search, or even the seller, if it's an adjacent farmer on friendly terms (and who has records back that far, a long shot!).

Edit: depending on the significance of the tax bill, another option could be to get a local property agent or surveyor to calculate a historical market value - the last of the gov.uk CGT pages suggests that value at 1982 should be used for assets owned before then.

xylophone

I would like some advice please. I sold a 4 acre parcel of agricultural land last year

It's a parcel of land that forms part of my farm land.

A business sale?

Are there any reliefs available?

Do you need to check with an accountant?

MarkCarnage

If you can't get any documentary evidence of the valuation at the time you acquired it, a specialist agricultural surveyor could probably assist for a fee. You can then use that to substantiate any query from HMRC. If it's ball park reasonable, and the value is relatively modest I doubt if they will argue it.

My wife had to do similar recently to place a value on a property she was left by a relative some years ago. The valuation given was in line with what I estimated more or less, and HMRC didn't query it.

Andrea2528

Hi,


Thanks, appreciate all the replies. My account were actually showing a loss of over £2,000 last year and if it wasn't for the sale of land, then they would be showing a loss this year as well. Does that make any difference?

eskbanker

Andrea2528 wrote: »

My account were actually showing a loss of over £2,000 last year and if it wasn't for the sale of land, then they would be showing a loss this year as well. Does that make any difference?

It would be worth answering xylophone's earlier questions, i.e. is the land an asset of the loss-making business or a personal one? What does your accountant say?

Andrea2528

Hi,


The land's a business sale
I'm not aware of any type of reliefs that I could claim
I don't have an accountant


Thanks

eskbanker

If the land was put in your personal name in 1978 but was owned by a business in 2019, at what point was it transferred, i.e. was there a transaction somewhere in between that may have realised a capital gain, thereby reducing the current CGT liability?

The type of business will affect the situation, as explained at https://www.gov.uk/capital-gains-tax-businesses:

You pay Capital Gains Tax if you’re a self-employed sole trader or in a business partnership. Other organisations like limited companies pay Corporation Tax on profits from selling their assets.

If you don't have an accountant, are you preparing the business accounts yourself or do you have any assistance?

Andrea2528

I have always owned the land since 1978, when my father put it in my name. It forms part of my farm land. It's 4 acres that I sold.


I'm preparing the business accounts myself without an accountant.