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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My parents are selling some agricultural land and are considering

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My parents are selling some agricultural land and are considering giving me the money, it would be approximately £300000. would they need to pay any tax and would I have to pay any tax.
Many thanks sue
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. Do your parents farm the land themselves or is it let to a farmer?
Customer: replied 1 year ago.
My parents and I farm it at the moment
Customer: replied 1 year ago.
do you need to know anything else?
Expert:  TonyTax replied 1 year ago.
Thanks.
Can you tell me who owns the farming business please. Is it run through a limited company, as a partnership or as a sole tradership? Is the land the business's only asset?
Customer: replied 1 year ago.
Dad and Mum own the farming business it is run as a partnership and they are looking to retire, they will be selling other land too and maybe the farm house too its all up forsale at the moment for about 1.8 million, but the 40 acres I farmed which I used to farm with them and they are thinking of gifting the money from this to me approximately £300000.
Customer: replied 1 year ago.
The 40 acres is a separate block of land about 3 miles from the actual farm
Expert:  TonyTax replied 1 year ago.
Thanks.
Leave this with me while I draft my answer. It will take a while so please bear with me.
Customer: replied 1 year ago.
thanks
Expert:  TonyTax replied 1 year ago.
Hi again.
If your parents are selling up,then they may qualify for entrepreneurs' relief on the gains they make on the disposal of business assets. If they did qualify, then the rate of Capital Gains Tax would be 10% as opposed to the regular rates of 18%, 28% or a combination of the two. Whether ER would apply to the 40 acres you are farming would depend if it could still be claimed to be a business asset. If you pay rent to your parents, then it probably won't qualify for Er treatment. Take a look here for information on ER:
https://www.gov.uk/government/publications/entrepreneurs-relief-hs275-self-assessment-helpsheet
If you are gifted £300,000 in cash you won't pay tax on that. However, if one or both your parents die within seven years of making the gift, their respective shares will be included in their esates for Inheritance Tax purposes. Taper relief applies to gifts over three years old as you can read here:
http://taxaid.org.uk/guides/information/other-taxes-you-may-need-to-know-about/inheritance-tax/828-2/taper-relief-for-lifetime-gifts
If your parents gifted you the land, you would be able to make a claim for holdover relief if it was classed as a business asset, such that any CGT could be deferred until you sold the land. Take a look here for more information on gift holdover relief:
https://www.gov.uk/gift-holdover-relief
I hope this helps but let me know if you have any further questions.
Expert:  TonyTax replied 1 year ago.
A gift of agricultural property may also have IHT benefits as you can read here:
https://www.gov.uk/guidance/agricultural-relief-on-inheritance-tax
Customer: replied 1 year ago.
Hi TonyAre Mum and Dad allowed to gift me that amount of money in one go.
From what you have said and the links, basically it looks as if they are entitled to ER on the sale of the land, so once they have paid the tax on the sale of the land, will there be any other kind of tax to pay if they gave me the remainder of money.
Thanks Sue
Expert:  TonyTax replied 1 year ago.
It can be paid with a single payment or several.
After CGT, there would only be the possibility of IHT which I mentiioned earlier.
Customer: replied 1 year ago.
Hi TonyThanks for you help Sue
Expert:  TonyTax replied 1 year ago.
Thanks and good luck.
Would you mind rating my answer before you leave the site please.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15882
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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