This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Land and ER

Feedback
Posts:351
Joined:Thu Feb 23, 2012 10:26 am
Land and ER

Postby Feedback » Mon Oct 08, 2018 1:09 pm

Generally speaking, is land a qualifying business asset for the purposes of cgt? I've reviewed hmrc's cgt manual and it references farmland for development but not land in general.

The background is a landowner acquired the commercial land, and has leased it to 2 separate companies over the years and now wishes to sell. Does the land qualify for ER?

AdamS93
Posts:268
Joined:Tue Sep 26, 2017 6:28 pm

Re: Land and ER

Postby AdamS93 » Mon Oct 08, 2018 1:17 pm

No.

He is not selling a business or part of a business capable of separate operation...

A business asset is totally different to disposals that qualify for entrepreneurs relief as well.

Feedback
Posts:351
Joined:Thu Feb 23, 2012 10:26 am

Re: Land and ER

Postby Feedback » Mon Oct 08, 2018 1:20 pm

What if the landlord owns the 2 companies (or is a significant shareholder in each company) who leased the land, and used the land as trading asset rather than investment per the manual...

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64060

Does that change matters?

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: Land and ER

Postby SteLacca » Mon Oct 08, 2018 1:29 pm

In order to qualify he would have to be making a qualifying disposal in shares of a trading company, and the land would have to be an associated qualifying disposal.

ER can be a minefield. If you want to read the legislation it's at TCGA S196H etc.

Feedback
Posts:351
Joined:Thu Feb 23, 2012 10:26 am

Re: Land and ER

Postby Feedback » Mon Oct 08, 2018 3:27 pm

what do you mean when you refer to S196H?

AdamS93
Posts:268
Joined:Tue Sep 26, 2017 6:28 pm

Re: Land and ER

Postby AdamS93 » Tue Oct 09, 2018 12:38 pm

Taxation of Chargeable Gains Act 1992 Section 196H - it is the law.

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: Land and ER

Postby SteLacca » Tue Oct 09, 2018 3:31 pm

It's 169H etc. Typo in my original post

Feedback
Posts:351
Joined:Thu Feb 23, 2012 10:26 am

Re: Land and ER

Postby Feedback » Tue Oct 09, 2018 7:48 pm

My bad, I'm aware of what tcga92 is, I just can't find s196h when I use legislation.gov.uk

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Land and ER

Postby bd6759 » Wed Oct 10, 2018 12:06 am

It was added by Finance Act 2008, schedule 3.

http://www.legislation.gov.uk/ukpga/2008/9/schedule/3

Feedback
Posts:351
Joined:Thu Feb 23, 2012 10:26 am

Re: Land and ER

Postby Feedback » Wed Oct 10, 2018 3:03 pm

Thanks, that makes sense

so if there are two brothers, one who owns land, and one who owns a trading company, which he is planning on selling. the trading company leased the land from the first brother.

ER is available to the second brother and not the first (assumption here is that qualifying conditions are satisfied). The second brother has owned and worked in the trading company for more than one year (actually for many years). If the first brother gifts the land to his sibling before the company shares or business are sold, can the second brother claim ER on the rise in land value, as the land has been used wholly and exclusively in the business that was sold?

I would think HMRC would take a dim view of such a gift, being contrived for tax purposes.


Return to “Capital Gains Tax, CGT”