Tax reduction Inheritance/Capital Gains.

MickEa64

Three years ago, I inherited a derelict house from my father who never made a will. I acted as executor went through inheritance tax (never paid any) etc. with a valuation of house of £350,000 and now my name is on the deeds. I have demolished the house and obtained planning consent for five house and am about to put on the market for £600,000.

What is the most tax efficient way to sell the land and give £100,000 to each of my two children and split the rest between myself and wife.

Would be appreciative of any thoughts before the land sold and too late to change anything.

Jeremy535897

The main issue here is whether the development profit on the land is subject to income tax or capital gains tax. The case of Heather v Whyte is unhelpful:
https://www.rossmartin.co.uk/sme-tax-news/5695-building-plots-in-grounds-were-appropriated-to-trading-stock

Even if there is no trade, perhaps using the argument that there was no trading motive in acquiring the land (as it was inherited), Part 9A of ITA 2007 may treat the development gain as income. For these numbers, you should take proper professional advice.

MickEa64

Thanks for advice,
When should I seek help, before sold, maybe get 4 different cheques from solicitor in sale or after all complete and I distribute?

Jeremy535897

Seek advice now from an accountant or tax adviser. Don't do anything first. The first issue is whether your tax liability is income tax or capital gains tax. Advice based on the documentation so far will help to decide the risk that income tax is payable. If income tax is payable, consider a partnership. If capital gains tax is payable, consider splitting ownership between you and your wife. Simply getting four cheques from the solicitor will make no difference.