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TaxRobin
TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 15586
Experience:  International tax
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I have just received capital gains of £100k on an farmland

Customer Question

I have just received capital gains of £100k on an farmland that has been redesignated for building purposes. I am a basic rate tax payer as I am a student. Can you confirm that I will have to pay the higher CGT rate of 28% only on the portion where I go over the value over £31,785 + the £11,100 tax free allowance? Is there anything I should be looking at doing to reduce my CGT bill for the year, other than offsetting any capital losses I may have?
Submitted: 1 year ago.
Category: Tax
Expert:  TaxRobin replied 1 year ago.
HelloYou are correct. HMRC has a good example:Your total taxable income is £20,000 and your total taxable gains are £12,100.From your gains, deduct the tax-free allowance of £11,100. This leaves £1,000 to pay tax on.You’ve used £20,000 of the basic rate band (£31,785 for the 2015 to 2016 tax year) against your taxable income, so you have £11,785 left.You have enough of the basic rate band remaining to cover your gains, so you pay Capital Gains Tax at 18% on £1,000.Had you gone over then you would pay 28% on the amount over.Entrepreneur’s Relief (‘ER’) is available for gain up to £10,000,000 of “lifetime gain” per individual but a farm would not likely be able to use that.Look to your capital losses.
Expert:  TaxRobin replied 1 year ago.
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