Thank you for your question..
You should separate gains allowance for CGT purposes from personal allowance for Income tax purposes..
provided the land you have owned is in joint names, then you will split the gain 50:50 before offsetting any gains allowance.
As your wife has a taxable income of £0, then the first £32,000 of chargeable gain would attract CGT at standard rate and the rest at higher rate. You can't state taxable income as negative £11,000.
Improvement costs that enhance the value of the asset would be added to the purchase price in calculating the net gain.
If you were to put a value on 'labour of love' then this value would form part of your self employed business and chargeable to income tax and Class 2/Class 4 national insurance ... counter productive in my opinion.
I hope this is helpful and answers your question.
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