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Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
As this is a second residence you own then there will be a Stamp Duty Land Tax (SDLT) surcharge of 3%. If you dispose of the new residence within three years you can apply to the Stamp Office for this to be refunded.
Now, regarding Capital Gains Tax (CGT), how large is the overall plot of land?
This is within the 'permitted area' of half a hectare. If you sell the land whilst you still reside there then there is no CGT. However if you are selling the plots with planning permission then the uplift in value is treated as a gain and CGT will apply. However, as you have let the old house any gain will be subject to CGT. However a proportion as for the time it was your sole or main domestic residence and the last 18 months of ownership when you are deemed to be in residence even if this is not the case Private Residence Relief (PRR) applies and this relieves CGT at 100%. You will also be able to offset the gain by the non cumulative Annual Exempt Amount (AEA) of 11.1K and also Lettings Relief (LR) up to 40K.
If you acquire a second home the SDLT surcharge on top of the base rate applies irrespective.
Correct, the plot sale to the Ltd Coy, if you were still residence, avoids CGT as the site is within the permitted area.
Companies are not exposed to the CGT regime, all surplus or loss merely applied to the trading account and ultimately reflected in the Profit and Loss Account (P&L).
Depending on the possible gain by the company which would be taxed at 20% the probable minimal tax exposure would be to sell to the Coy, build on the plot then sell. Thus only the gain by the company, presumably minimal, would be exposed to CGT. The sale of the original house will probably avoid CGT altogether as AEA and LR will probably reduce the gain to zero anyway.
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25,001 – 250,000 - 2%
250,001 – 925,000 - 5%
925,001 -1,550,000 - 10%
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