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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 14110
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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If you receive payment as a result of entering into a

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If you receive payment as a result of entering into a release deed with a neighbour (re restrictive covenant on their garden) what would be the tax implications ?

Hi, Sam here , one of the UK tax Experts here on Just Answer, thank you for your question and I shall reply shortly

Hi

Can you advsie what restriction would be placed, on whom it would be placed and any money involved. How much and payable to whom

Thanks

Sam

Customer: replied 1 month ago.
There is already a restrictive covenant in place on my neighbours property. My property has the benefit of the covenant. If i give permission to release my neighbours property from the covenant it could be worth up to 30% of the uplift of value. If for example this amounted to £200,000, how much tax would be due on this non business asset ?

HI

Its nothing to do with business as this arise son your private residence

But what does the covenant restrict and what benefit does it provide to you and will this be paid to you? I And on whose property will this uplift the value ? I need more information so I can establish if tax arises and on whom

Thanks

Sam

Customer: replied 1 month ago.
The covenant restricts building/development. If I release the covenant, the neighbour will benefit because his land will be more valuable if he can build on it. Payment would have to be made to me to release the covenant.

Hi

Then this payment will be liable to tax, and its considered under capital gains tax .

However as this relates to a property that appears to have been your main residence throughout ownership. then this will be exempt as falls within the private residence relief regulations

And there may also be stamp duty due (which will arise on the neighbour) and they will need to discuss this aspect with the solicitor dealing with the sale as it will better their overall position with the value of the land/their own property

Do let me know if I Can assist further, or, if you have all that you need, it would be appreciated if you could rate me for the level of service I have provided, or click accept

Thanks

Sam

Customer: replied 1 month ago.
Are you still there ?

Hi

Yes I am = how can U help you further?

thanks

Sam

Customer: replied 1 month ago.
Please can you let me know when you will answer ?
Customer: replied 1 month ago.
Sorry, your message has appeared now, there was a delay.So you say that there will be no capital gains tax to pay due to exemption due to private residence relief regulations.Thank you very much for your help.

Hi

Glad you have received the response, it would be appreciated if you could rate me for the level of service I ahve provided, or click accept

Thanks

Sam

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