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

Hold-over relief & PPR

dannyoxford
Posts:2
Joined:Mon Feb 25, 2019 1:38 pm
Hold-over relief & PPR

Postby dannyoxford » Mon Feb 25, 2019 2:00 pm

Hi everyone,

I was hoping someone on here may be able to assist as I am a bit lost, however, I do appreciate this is a complex matter and may need some specialist advice.

My grandparents are gifting land to my brother. The land has been valued by an independent valuer at £50,000. It is a part disposal i.e. the land gifted forms part of a larger piece of land which was purchased some time ago for c£10,000.

I have done some digging through the various HMRC manuals and believe the following applies;

A portion of the gift is part of my grandparents garden for their only home. As such, I thought it would qualify for PPR (subject to the permitted area rules).
A portion of the gift was used as a 'yard' for my grandfathers sole-trader business (for which he paid rates at the time) but he has since retired. The land now has the left over tools/work materials. As such, I thought this may qualify for hold-over relief as business asset.

My questions are;
1 - Would the part of the land that was used as a 'yard' still qualify for hold-over relief even if the business is no longer trading? If so, can we use Form HS295 to record that part of the disposal. Where this is complicated is that the land is owned 50/50 by my grandparents but only my grandfather ran the business. Would only the 50% owned by my grandfather qualify?
2 - If hold-over is not available because it is not a business asset, does it revert back to land that is available for PPR? The land is attached to the main home and garden. I am unsure if it is not a business asset and not part of the main home then what is it classified as.
3 - Do we need to report the PPR portion of the land (garden) on a tax return? My grandparents do not file tax returns and when reading the Capital gains guidance, it says a tax return is not required if;
- Value is more than £40,000.
- Gain is more than £11,300.
- Qualify for Private Residence Relief on the full amount of the gain.

The first two are met but it is the last point where I get confused; Full PPR is available on that section but not the gift as a whole.

Alternatively, once I have some further clarity on the above. Does anyone know if it is possible to write to HMRC to set out calculations and request agreement of treatment? Preventing the need to submit tax returns.

Thanks in advance,
Danny

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Hold-over relief & PPR

Postby AGoodman » Mon Feb 25, 2019 8:19 pm

1. No, it has to be used in the business at the time of the transfer to qualify for holdover. Your father might qualify for entrepreneurs relief on his half share of the yard if he retired within the last 3 years, reducing the tax rate on his half of this part to 10%.
2. I doubt it. It does not form part of the house and garden even if it is attached. It is just an asset.
3. Yes, probably. No need to file a return for this alone but sensible to mention it, if only to ensure you get protection from a later assessment after 12 months.

I suspect you will need to file a return rather than seeking agreement by letter - self assessment is essentially the agreement process (it's agreed unless HMRC say otherwise).

dannyoxford
Posts:2
Joined:Mon Feb 25, 2019 1:38 pm

Re: Hold-over relief & PPR

Postby dannyoxford » Wed Feb 27, 2019 10:06 am

Thank you - I really appreciate you taking the time to answer my questions! Really helpful.


Return to “Capital Gains Tax, CGT”