Would Enterprise allowance apply?

[Ainsley]

Hi, my first posting on this forum so any help would be appreciated to understand this taxing question!

I have sold agricultural land (my total holding but a small area in farming terms) and understand that there will be a CGT payment liability having made a gain since 1977 to this last tax year exceeding the annual allowance. I wonder if enterprise allowance could be claimed?

I note the response in this forum to Entrepreneurs Relief - 'Husbandry' posting which indicates that it needs to be carried on as a business concern. I need some clarification as to whether that business allowance category would apply to me. The farm has provided some income (not my main source) from grassland harvesting payments and rental for grazing for many years. Additionally it has been managed as a business (registered with the Rural Payments Agency) and has been subject to Single Farm Payments in that respect. The income has been declared on my tax returns. Also there have been costs associated to maintain the land. In my humble opinion I class this as a business but the HMRC obviously has rules that they apply and case law set precedents.

Does this, my situation, then fall into the category whereby Entrepreneurs Relief can be claimed against the capital gain.

As a supplementary question should I assume the land initial cost is the value used for probate when I inherited the land as
one (of two) Tenants-in-Common with a 50/50 share.

[mullet]

Reading this in conjunction with your second post ... you won't have upset anyone (no-one really gets upset here and there is very little moderation required - they usually just have to sweep up after weekend spammers). Maybe the problem is confusion with the terms used? The title asks about enterprise allowance, as does the third sentence. But at the end you ask whether entrepreneurs' relief could be claimed against the gain. What are you asking?

Some answers based on what I think the question is:

1. The gain is the difference between sale price and March 1982 value - not probate value (assuming that you inherited in 1977). Disposal costs and any allowable capital enhancement expenditure are allowable deductions.

2. Enterprise allowance ... can't remember. It appears to be a taxable allowance to supplement income. See BIM40405 http://www.hmrc.gov.uk/manuals/bimmanual/bim40405.htm. Is that a red herring?

3. Would entrepreneurs' relief be available? In broad terms, if you have made a material disposal of qualifying business assets then relief will be available. Is it a business asset? HMRC are usually OK if you have maintained the land - seeding, topping, provision of water supply, maintenance of fences/hedges/ditches etc. That amounts to "husbandry". But simple letting will not qualify for ER. And you can't just sell one or two fields from the total - it has to be the entirety or a material part - for instance a farm ceasing with dairy but continuing with arable - "the whole or part of a business".

[Ainsley]

Your post is appreciated, Mullet.

I did realise recently and too late that I had mixed up my terminologies - just confusion over taxation terms I guess or old age!No doubt that has had a lot to do with lack of responses. I learn from this I hope!

Your main assumption is quite correct. It really is Entrepreneur Allowance towards offsetting the CGT liability that I was looking for help with. Your response to my rather garbled questions has certainly gone a long way to answering that.

Thanks for taking the trouble to explain.