Transfer of land to shareholder

[JamesBarr]

My parents own a farm and wish to give me some land upon which to build a house. I am a shareholder of the farm, that currently owns the land. If the farm gives me the land as a gift, presumably I have to pay income tax on the market value? Is there a way of avoiding this? Could the land be transferred to my wife as a gift and not be taxable as she is not a shareholder of the farm? Is there any way of avoiding tax implications for the farm, my parents and myself?

[accountant@uktaxshop]

James,

Presumably this if farmland, and so is classed as "agricultural land" from an IR point of view.

If so your transfer may be eligible for hold over relief on the gift, and there would be no gain chargeable at this time.

The value of the gain held over (broadly the market value of the land less the original cost after taper relief and indexation) will reduce your base cost of the land for CGT purposes, but this is unlikely to become an issue if this is you main residence.

To do this you need to make the appropriate election. Your normal advisor will be able to help you do this.

However without further research I am far from certain that given you are about to build a house on this land, the above relief would still apply – a fairly fundamental point.

Anyone have any thoughts?

James Smith
Chartered Accountant
www.uktaxshop.co.uk
01284 764436