Capital Gains Tax on sale of field

s77

Hiya, can anyone knowledgeable advise....

We have been approached to sell our 7 acre field and are just trying to work out the capital gains implications.  Can someone state what rates CGT are on the sale of land? Are they 10/20% dependant on income tax bracket, as oppose to the residential rates of 18/28 %.

All pointers welcome and many thanks

Jeremy535897

Yes, subject to two further questions:

• is the land used for a business purpose?
• is it part of a larger holding?

I assume it has nothing to do with your main residence.

s77

Thanks for taking the time to reply, it's much appreciated.
The field did originally form part of a property consisting of a house with 12 acres but we sold the house and 5 acres 4 years ago, retaining the remaining 7 acres of field which we have now been approached to sell. 

No, not associated with any business/not part of a main residence/not part of a larger holding. Purely just a field.

Many thanks

Jeremy535897

Presumably you apportioned the base cost between the land sold and the remaining land, so you will know the remaining base cost to use? The rate will be 10%/20% not 18%/28%. 

s77

Hi again.

The house and the 5 acres were sold together as one property (sadly making it hard to know the sale value of the land alone at that time), hence we will have to use estimates of the value of the land per acre when we first bought the property and the value on the day the remaining 7 acres are to be sold to work out the gains.

But you have confirmed the rates that we need to use to work this out, and that is hugely appreciated. Thanks ever so much for your time.

Jeremy535897

If you knew the total cost of the land (12 acres) and the property when you made the first sale, presumably you apportioned a part of that cost to that sale, and what you have to set off against the sale of the 7 acres is the remainder (assuming the land and property were acquired post 31 March 1982 by way of an arm's length transfer)?

It may be that you used the following procedure on the first sale:
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg12731

s77

We bought the house and attached 12 acres as one purchase in 2009. We doubled the size of the house over the years and when we sold it,  with only 5 acres of attached land in 2018, the house had obviously increased substantially more in value than the land itself.  The valuation and sale of the property in 2018 was based on the house and only 5 acres.

The land nor the house have not ever been valued on their own respect, as they had been bought or sold together with varying quantities of land. 

That's why I figure we will have to use the historic valuation of average similar land prices per acre in the area when we bought in 2009 and compare these with the sale price per acre when we sell  the remaining 7 acres later this year,  in order to be able to calculate the capital gains.

Unless I am missing something very obvious (which is entirely within the realms of possibility!)

Jeremy535897

When you prepared the capital gains tax computation for the sale of the house and 5 acres in 2018, you must have apportioned part of the overall cost in 2009 to that transaction, or did you manage to claim main residence relief in respect of all of it? If you did apportion part of the base cost to the earlier sale, the remaining part of the 2009 cost is what you deduct from the proposed sale, not some valuation based on other land sales in the area.