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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5145
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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We are selling some land we have owned five years and there

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We are selling some land we have owned for about five years and there will be a taxable gain. I have a few questions.
My wife has taxable income of £0. As part of the CGT calculation can we state her taxable income as 'negative £11,000'?
Much of the apparent gain is accounted for by improvements we have made in terms of new agricultural buildings, ground works and plantings. Can we offset the costs of these in any way. This has been a privately funded 'labour of love', not part of any business. Should we try to include it as part of my, almost defunct, self-employed business?

Thank you for your question..

You should separate gains allowance for CGT purposes from personal allowance for Income tax purposes..

provided the land you have owned is in joint names, then you will split the gain 50:50 before offsetting any gains allowance.

As your wife has a taxable income of £0, then the first £32,000 of chargeable gain would attract CGT at standard rate and the rest at higher rate. You can't state taxable income as negative £11,000.

Improvement costs that enhance the value of the asset would be added to the purchase price in calculating the net gain.

If you were to put a value on 'labour of love' then this value would form part of your self employed business and chargeable to income tax and Class 2/Class 4 national insurance ... counter productive in my opinion.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond. and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Thank you, ***** ***** we are almost there. We are not financial experts and are only selling our land because of health reasons (we had previously seen it as permanent).
I should have mentioned that the land was bought in two transactions and so is held in two titles of approx equal size, one each by my wife and I. The offer we have is for a single parcel of land and so I think we have discretion over how we allocate the sale price between the two titles? I will have an income of approx £33000 in the 2016/2017 tax year.

I thank you for accepting my answer.

Your discretion is workable.

Best wishes.