Have Tax Questions? Ask a Tax Expert for Answers ASAP
Hi.The first £11,100 of gains an individual makes in a tax year are tax free.If you had an income in 2015/16 of £7,500 and a capital gain of £1,000,000, you'd pay CGT at 18% on £31,785 of the taxable gain and at 28% on the balance of £957,115.If you used the land for business purposes, you may qualify for entrepreneurs' relief which could limit the rate of CGT to 10%. Take a look here for more information.I hope this helps but let me know if you have any further questions.
Thanks Tony: I was afraid you would come up with the same answer as I. As a follow-up, I've lived in my house for over forty years, and would sell it with the adjoining five acres. The footprint of the house is approximately 1/7th of an acre, can I include sufficient of the land to enlarge that footprint (or garden) to 1.2 acres, the house and 1.2 to be disposed of without capital gains tax, paying the full .28 percent on the remaining ca. four acres?
You can claim main residence relief for a plot (house and land) up to half a hectare or about 1.23 acres in size. If the house itself is of a stature and character which demands a large piece of land for its "reasonable enjoyment " (whatever that means!) you may be able to claim main residence exemption for more than 1.23 acres.Take a look at HS283 for more information on CGT and the main home. Any land fenced off from the main house and garden or let would not be eligible for main residence relief.
Thanks. ***** correct that gain from the sale of a main residence does not have to be reported to HMRC, as long as it's always been occupied as the main residence of the seller?
Thank Tony: One further question and I'll ring off. Re the previous question, for simplicity, suppose I sell the house and 1.2 acres separately and in advance from the truncated four- acre paddock?
Tony, I promised to ring off after the previous question, but can't resist asking if more than 1.2 acres can be considered "garden" for tax purposes? The property situation is house and five acres, bought years ago specifically to accommodate a few horses (pleasure, not commercial in any way. We still have two such pets that do nothing but eat and make compost).
Thanks Tony, for your very helpful assistance.