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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5115
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Is it better individuals to purchase land, sell it and pay

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Is it better for 9 individuals to purchase land, sell it and pay capital gains gain the first £11,100 free and then pay capital gains tax at either 10% or 20% depending upon the individual's income or put it into a Deed of Trust with the land being purchased by 2 individuals?
Many thanks for your advice and help,

Thank you for your question..

If two individuals are paying for the land, then there are IHT implications as the amounts covering share of the other 7 would be deemed a potentially exempt transfer and seven year rule would apply (assuming two are paying on behalf of 9 individuals).

More information on gifts and IHT implications can be found here

As beneficial owners of the land, all 9 would be able to utilise gains allowance of £11,100 each to cover gain on sale of land and pay CGT at the rate of 10%, 20% or a combination of both depending on individual's taxable income in the year of sale.

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.

Customer: replied 1 year ago.
Thank you very much for that advice. Would you be kind enough to let me know how much tax would be paid via a Deed of Trust. Very many thanks, Mandy

Thank you for your reply.

Lets say 2 individuals pay for land costing £90,000. they have effectively gifted (7/9x90) £70,000.

Provided they survive for 7 years from the date of making the gifts, the gift itself is out of scope of IHT.

Now we come to CGT -

The plot of land is sold for say £225,000 giving rise to a capital gain of £135,000 equivalent to £15,000 per owner.

Assuming all are basic rate taxpayers, then CGT payable would be (15,000-11,100) £3,900 x 10% = £390 per owner

in total (390 x 9) £3,510

I hope this is helpful and answers your question.

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