capital gains tax problem?

Location
salop
I am in the enviable or not ,position of having to pay c.g.tax on the sale of some land, 2 acres. What can I do to reduce tax payable. Roll over relief is probably not relevant. I have spent quite a bit on a new farm building and some farm maintenance jobs that were seriously overdue drainage and fencing etc. Entrepreneurs relief?
 

chaffcutter

Moderator
Arable Farmer
Location
S. Staffs
Rollover is fine into farm buildings as long as the land sold and the building are both used in the business, none of the maintenance jobs will qualify though but they are an expense against income tax anyway.

Why do you think RoR is not relevant?
 

Goweresque

Member
Location
North Wilts
Entrepreneurs relief would only apply if you gave up farming entirely. You have to sell a business in its entirety to qualify, you can't sell one field off and go on farming the rest for example. You don't have to stop being in business entirely (ie retire completely) but you do have to leave the business thats generating the gain. So if you owned a farm and a shop you could sell the shop and claim entrepreneur relief and still keep farming for example, as farming and shop keeping are different businesses.

My understanding for ROR is that ALL the money received has to be spent on a qualifying asset. But i made have misunderstood my accountant.

That is my understanding too, though mine did say there can be some wiggle room if you're spending 95%+. Also that building new buildings with CGT gains does not qualify for RoR either, you have to buy a pre-existing asset. I have asked my accountant on this specific point several times and that has always been his answer.
 

Hereward

Member
Location
Peterborough
Entrepreneurs relief would only apply if you gave up farming entirely. You have to sell a business in its entirety to qualify, you can't sell one field off and go on farming the rest for example. You don't have to stop being in business entirely (ie retire completely) but you do have to leave the business thats generating the gain. So if you owned a farm and a shop you could sell the shop and claim entrepreneur relief and still keep farming for example, as farming and shop keeping are different businesses.



That is my understanding too, though mine did say there can be some wiggle room if you're spending 95%+. Also that building new buildings with CGT gains does not qualify for RoR either, you have to buy a pre-existing asset. I have asked my accountant on this specific point several times and that has always been his answer.
You can improve an asset you already own, my understanding this could be buildings.

I believe many farms put up new Grain stores as a CGT roll over relief.
 

Goweresque

Member
Location
North Wilts
You can improve an asset you already own, my understanding this could be buildings.

I believe many farms put up new Grain stores as a CGT roll over relief.

If thats the case (and I hope it is and my accountant is wrong, it could save me some money!) you'd still have to spend all the gain on the new buildings etc to qualify, you can't spend half on something and pay the tax on the other half, and keep some cash in your hand.
 

chaffcutter

Moderator
Arable Farmer
Location
S. Staffs
You only have to spend all the proceeds on a RoR claim to pay no tax at all, if you spend less then the remainder will still be subject to tax. Our accountant always used to say that too but I’ve done enough of them now to know it’s not quite true, except to pay no tax at all.
 

Goweresque

Member
Location
North Wilts
You only have to spend all the proceeds on a RoR claim to pay no tax at all, if you spend less then the remainder will still be subject to tax. Our accountant always used to say that too but I’ve done enough of them now to know it’s not quite true, except to pay no tax at all.

I thought you had to spend the vast majority (90%+) of a gain on qualifying assets to get RoR? That you can't just pick and choose - say a gain £100k, and spend £30k on a new barn, and pay tax on the other 70k?
 

chaffcutter

Moderator
Arable Farmer
Location
S. Staffs
No, you can do exactly that. And you have three years forward to use up part or all of the rest. You can also apply any or all of it to a qualifying asset purchased within the previous year.

The CGT becomes payable 31Jan in the tax year following the tax year of the disposal, if you have to pay it and subsequently invest in another asset, you can claim it back.

Buildings and fixed plant qualify, also holiday lets as a business subject to minimum occupation rules, helicopters and aircraft!
 

Hereward

Member
Location
Peterborough
No, you can do exactly that. And you have three years forward to use up part or all of the rest. You can also apply any or all of it to a qualifying asset purchased within the previous year.

The CGT becomes payable 31Jan in the tax year following the tax year of the disposal, if you have to pay it and subsequently invest in another asset, you can claim it back.

Buildings and fixed plant qualify, also holiday lets as a business subject to minimum occupation rules, helicopters and aircraft!
As I understand it too.

I thought you had to spend the vast majority (90%+) of a gain on qualifying assets to get RoR? That you can't just pick and choose - say a gain £100k, and spend £30k on a new barn, and pay tax on the other 70k?
The confusion comes in, that you have to roll over the full amount not just the gain.

E.g. sell a field for £100k and make a £10k gain

You have to spend £100k on a qualifying asset to get full relief not just the £10k gain,

If you spend £50k on a qualifying asset you will get 50% relief so still have CGT to pay on 50% of the gain.
 

Goweresque

Member
Location
North Wilts
As I understand it too.


The confusion comes in, that you have to roll over the full amount not just the gain.

E.g. sell a field for £100k and make a £10k gain

You have to spend £100k on a qualifying asset to get full relief not just the £10k gain,

If you spend £50k on a qualifying asset you will get 50% relief so still have CGT to pay on 50% of the gain.

But what if the gain is the vast majority of the sale proceeds?

Say you have owned some land since the year dot, and its valued at 1982 values (2k for sake of argument), and you sell it for 10k/acre. So lets say a 100 acre block, base value £200k, sale value £1m, gain of £800k. Am I right in thinking in such a case you'd have to spend all the gain (ie over 800k out of the sale proceeds of 1m) on qualifying assets in order to claim any RoR at all?
 

Still Farming

Member
Mixed Farmer
Location
South Wales UK
But what if the gain is the vast majority of the sale proceeds?

Say you have owned some land since the year dot, and its valued at 1982 values (2k for sake of argument), and you sell it for 10k/acre. So lets say a 100 acre block, base value £200k, sale value £1m, gain of £800k. Am I right in thinking in such a case you'd have to spend all the gain (ie over 800k out of the sale proceeds of 1m) on qualifying assets in order to claim any RoR at all?
Right big palatial grain complex that would be???
 

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Red Tractor drops launch of green farming scheme amid anger from farmers

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As reported in Independent


quote: “Red Tractor has confirmed it is dropping plans to launch its green farming assurance standard in April“

read the TFF thread here: https://thefarmingforum.co.uk/index.php?threads/gfc-was-to-go-ahead-now-not-going-ahead.405234/
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