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bigduckontax, Accountant
Category: Tax
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We have some land in our family (around 13 acres). A company

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We have some land in our family (around 13 acres). A company has an option with us to purchase the land and has just submitted a detailed planning application to the local authority. If we gain planning consent the land will be auctioned off to a developer and the 8 share holders in my family stand to make a gain after commission of approximately £11.52m. My share of this would be £1.44m. I've spoken to financial advisors who have told me that my only hope of avoiding CGT would be to invest it all in a government enterprise initiative investment which can make healthy returns but would lock in my capital for several years. If this is all that can me done I'd rather try to make my own direct investments over the financial year and just pay my CGT in the next financial year so I have control.
I have stumbled upon this site and was wondering if you can advise of any alternative options? Any assistance would be most welcome although I hold out little hope as I have carried out a fair bit of research and sadly feel I already know the unfortunate answer that I will have to pay at some point 28% of my gain to HMRC....
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.
As it stands you would be liable to CGT on your share of the gain less your Annual Exempt Allowance of 11K leaving 1.33m taxable at 18% or 28% or a combination of the two rates depending on your income in the year of sale; worst case scenario, a tax bill of say 383K, ouch.
If you make direct investments you might, if you invest in the following areas only [HMRC advice], be entitled to Roll over relief:
'Getting relief for the assets you have disposed of
Both the old assets you have disposed of and the new ones you have
acquired must be:
• Interests in buildings or parts of buildings, or
• Interests in land, or
• Fixed plant or machinery, or
• Ships, aircraft, hovercraft, satellites, space stations and spacecraft, or
• Goodwill, or
• Milk, potato or ewe and suckler cow premium quotas, or
• Fish quotas, or
• Payment entitlements under the single payment scheme, or
• Lloyd's syndicate capacities.'
Some are not without significant risk [eg Lloyds names]!
However, this relief merely postpones the gain to future tax years, but, if these activities make a loss, then your CGT exposure will be equivalently reduced.
You might, if you hold the business for over a year, be entitled to Entrepreneurs' Relief (ER) which would reduce the tax level to 10% on the gain on disposal of a business. ER is relatively complex as you will see from the following HMRC web site:
However, if available ER would reduce your CGT exposure to say 133K on your quoted figures, a substantial saving.
So there you are, a quick canter through some possibilities. However, the sums you speak of are substantial and I am of the opinion that you must seek local, trusted, professional advice to guide you through the CGT maze. One inadvertent error could cost you dear. I must urge you not to try this exercise alone. You must seek independent advice as a matter of urgency.