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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13945
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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capital gains tax on sale of old farm land and buildings

Customer Question

capital gains tax on sale of old farm land and buildings
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.

Hi Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.

Could you expand on the position please.

Was this a working farm right up to the date of sale, if not when did it cease to be used for agricultural purposes and when was the date of sale

Was this bequeathed through a will

Is there any planning permission for any of the land, if so when was this applied for and is this area separated from the rest of the land

Did the sale at auction represent the true market value of the land/buildings?

Please advise further

Thanks

Sam

Customer: replied 3 years ago.

no answer received

Expert:  Sam replied 3 years ago.
Hi
I have asked you the following
Could you expand on the position please.
Was this a working farm right up to the date of sale, if not when did it cease to be used for agricultural purposes and when was the date of sale
Was this bequeathed through a will
Is there any planning permission for any of the land, if so when was this applied for and is this area separated from the rest of the land
Did the sale at auction represent the true market value of the land/buildings?
Thanks
Sam
Customer: replied 3 years ago.

can you tell me is there any tax relief on the sale of agricultural land and buildings.. the land did belong to myself and my wife before she passed away 3 years ago. up until recently this was rented out and I believe it was used as various types of farming over the last 40yrs while it was rented out.. I believe the sale price was a realistic market value.

Expert:  Sam replied 3 years ago.
Hi
Thanks for your response and the additional information.
As it was not used by you for farming in the last year - and was in fact creating rental income, then yes there will be capital gains to consider on the sale value.
This means there are no additional tax reliefs due, as this was not used by you, within the trade of farming, for the last 12 months of ownership.
From the sale value can be deducted the purchase value, and the costs to buy and sell this land and the buildings.
Any renovation costs of the buildings suffered by you can also be deducted and this will leave the gain to consider.
It is unlikely there are any tax reliefs under the private residence relief rules either as this sale does not seem to include the residence (farm house) within the sale.
So all that remains to consider is -
The first £11,000 will be exempt- as this is your annual exemption allowance for the year, and any remaining gain liable to 18% or 28% or a mix of both depending on your annual income.
if your annual income is in excess of £41865 then the gain will be charged at 28%, but if your annual income is less than this figure, then some of the gain will be charged at 18% (the amount equivalent to the unused basic rate band, for example, if your annual income was £20,000 a year - then you would have £21,865 unused basic rate band) and then any remaining gain at 28%.
You should alert HMRC of this sale, so they can arrange to issue you with a self assessment tax return after 05/04/2015 to declare the capital gain.
Let me know if you have any further questions
Thanks
Sam
Sam and other Tax Specialists are ready to help you
Customer: replied 3 years ago.

Thank you Sam . can you tell me is the rate of capital gains tax based on my income before tax or after ?

Also can losses on sale of shares be set against gains on property/land sold?

Expert:  Sam replied 3 years ago.
Hi
Thanks for your response
The rate of capital gains is based on your income before tax.
And yes any capital losses made in the same or previous years can be offset against the gains rising (this is utilised before the use of the £11,000 annual exemption allowance)
Do let me know if you have any further questions, but if in the meantime you would be kind enough to rate/accept, this ensures I am credited for my time, which would be much appreciated.
Thanks
Sam