Tax on Gifted Land

[aims]

Hi All,
I’m currently looking to have some land (garden) gifted to me by my father from his current primary residence. I’ve been advised there are some tax considerations especially as i’m deciding whether to complete the transfer of land before or after I obtain planning permission for it. I am looking to get professional tax advice but wanted to get opinions before-hand. The three taxes i’m aware of are:

• Capital Gains Tax – I imagine this applies because the land is no longer part of the primary residence once it is split and gifted. However my father is retired, so I’m not sure what % bracket for CGT he will fall in.

• Inheritance Tax – Shouldn’t apply to me if my father survives more than seven years after the gift

• Stamp Duty – shouldn’t apply to me as house is free from mortgage

Questions:

1. 1) Would my father have to pay CGT based on the information above?

1. 2) If we eligible for gift relief and I want to sell the new-build property, will I pay CGT even if it has then become my primary residence? The CGT on the gain (once I build a house) will be enormous as the land with a property on it will value considerably more.

1. 3)If I transfer the land pre-planning (lower value = less CGT), then find out I can’t get planning permission and want to transfer the land back, are there any tax implications to me/father? The land in theory goes back into his primary residence.

• 4) How does HMRC view ‘value’ of land and the gain? i.e. originally my father paid 80k for the whole property but the gifted land is only the garden portion of the property and may be worth around the 50-90k now on its own.

• 5) HMRC requires valuation from a professional surveyor only?

• 6) When dealing with the splitting and transfer of land, should a solicitor deal with HMRC for tax? Or will this need to be a separate process my father and I will need to do ourselves?

Many thanks for any help you provide!

[maths]

1. If the land to be given has historically formed part of father's garden then it is likely he will not have a CGT charge on the gift.
For IHT if father survives 7 years then IHT will not be a problem; even if he died within 7 years it may well be that no IHT charge would arise.

2. No gift relief is available. The tax paid on any gain made on a sale of the property you build will depend upon the facts; it could be subject to income tax not CGT.

3. Not really assuming each makes a gift.

4. The gift by father will be deemed to be made at its market value. For CGT it is a "part disposal".

5. No, although may be advisable.

6. No requirement for a solicitor to get involved with HMRC.

Other things being equal, and assuming father has no CGT charge on the gift (see 1 above), the higher the market value the better for the both of you. Hence, it may make sense for father to apply for planning permission rather than you.

[aims]

Thanks for the reply! Based on your last comment

Other things being equal, and assuming father has no CGT charge on the gift (see 1 above), the higher the market value the better for the both of you. Hence, it may make sense for father to apply for planning permission rather than you.

If no CGT is not applicable, why would it make sense for my father to apply for planning instead of me?

[maths]

I was referring to an application being made before the gift not after it and as father owns the land it would seem logical for him to make the application.

However, if you wish to make the application, that's fine.