How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4808
Type Your Tax Question Here...
bigduckontax is online now

My brother and I own a parcel of land in London (50/50 split).

This answer was rated:

My brother and I own a parcel of land in London (50/50 split). The land has been valued (RICS valuation) for CGT purposes at £50,000, therefore his shareholding is worth £25,000. He wishes to gift his share to his daughter.
Currently the land is not subject to planning permission (PP), but a planning application has been submitted and a decision is imminent
Obviously he would like to make the gift before PP is granted because the land value will increase and so will his CGT liability.
My question is:
When is the gift deemed to have been given, because there is a possibility that Land Registry might not register the new title before planning approval is given?
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to assist you with your question. In my experience the Land Registry are pretty quick, especially if the land is already registered. Planning permission can be a slow process. The gift is a disposal for CGT purposes. The gain is the difference between the 25K and the acquisition price upon which the question is silent. This gain, less the Annual Exempt Amount (AEA) of 11.1K, will be the amount subject to CGT at 18% or 28% or a combination of the two rates depending on your brother's income including the gain in the tax year the gift is made. I do hope that you have found my reply of assistance.
Customer: replied 1 year ago.
In respect of acquisition price: We both received a 1/3rd share of a property in 1993 on the death of our mother. Our father, who retained ownership of the remaining 1/3rd died in 2014 and we purchased this share from his estate on the 27th November 2015.
My original question is not answered. What if there is a delay at Land Registry and PP is granted before title is registered?
Customer: replied 1 year ago.
Another question: Although we were gifted a share in the property in 1993, for CGT purposes is the acquisition price £0 or the market value?
That is irrelevant, it is the date of transfer not the registration which triggers the CGT liability. The acquisition price will be the probate values, or in the case of your Father's case, the amount paid. Gifts would be deemed at current market value.
Customer: replied 1 year ago.
Thank you for the answer to part to 'Part 1'. I assume that once the documentation is sent to Land Registry, prior to PP, that will be the tax point for CGT.
Re the second part, could you confirm that, although we received a gift of 1/3rd of the property the CGT calculation would be based on the difference between the current market price and that of the market value of the property at the date of gifting?
Correct. Please be so kind as to rate me before you leave the Just Answer site.
Customer: replied 1 year ago.
You mentioned that the CGT rates are 18% and 28% but reading the HMRC guide it would seem that we could apply the 10% & 20% band i.e. 10% and 20% tax rates for individuals (not including residential property and carried interest)
Customer: replied 1 year ago.
.... presumably the plot of land, not having PP can be deemed non-residential
There is no 10% tax rate in 16/17. That might depend on the zoning.
Customer: replied 1 year ago.
that's weird. I am looking at the following web site where it is showing the tax band -
Customer: replied 1 year ago.
.. point 3.2
You may be correct, but if the zoning is residential HMRC might well apply the normal 18% rate.
bigduckontax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
I understand. Thank you for your help. Best regards, Jerzy
Delighted to have been of assistance, Jerzy. Thank you for your support.