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Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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my family has recently sold land and my house (the land was

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my family has recently sold land and my house (the land was adjacent to my house) to a developer. the house and land was left to us by our father in approx. 1988. I have been told that I will not be liable to capital gains on my house but probably will on the land. The land was divided into 3 plots mine, my brothers and my sisters. The land we think was valued at probate at £25000 in 1988/89 and we sold it for £570000 this year. As a self employed gardener I have been using my land in connection with my business ie. storing stuff composting and I had a greenhouse where I grew and stored plants for my customers. I was wondering what liability we would encounter, by using the land would that have any implications, and is the allowance added year on year or just applies in the year it was sold. many thanks . Andrew Bush

Hi Andrew

Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.

As long as the house has been your mian residence throughout your period of ownership, then you are correct in thinking there will be no capital gains - but if your siblings haled a share of the house too - then they will have capital gains on their share.

Then all of you will have capital gains on the land - as none of you enjoyed it as part of the - and as you used your share of the land purely for business, this is whay your charge arises.

The gain for each of you will be a third of the sale value less a third of the probate value - which forms the intial gain, From this initial gain you can deduct a third of the costs to sell (so legal fees and any estate agent fees) then the amount left has for each of you the first £11,000 exempt, then any remining gain liable to capital gains tax.

Capital gains rates are 18%, 28% or a mix of both and this is determined by what unused basic rate band you have after your normal annual income has been taken into account.

If your annual income is in excess of £41865 - then all of the remining gain will be liable to 28% as there is no unused basic rate band, whereas if your annual income was £30,000 then this would leave an unused basic rate band of £11865 , so the first £11865 of the gain would be libal to 18% and any remining gain at 28%

You should each alert HMRC of the sale, and you will just add the capital gain posityion into your next self assessment tax return.

Let me know if you wish me to expand on any of the information supplied.



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