CGT rates on land
Discussion
Trying to calculate the CGT on a bit of land - just a paddock, not connected to residential or business property, and not with planning permission either.
Is it a flat rate of 10% / 20% as I’m led to believe, or is it based on your personal tax rate?
Seem to only find conflicting views as to whether there’s also a potential 28% rate.
TIA.
Is it a flat rate of 10% / 20% as I’m led to believe, or is it based on your personal tax rate?
Seem to only find conflicting views as to whether there’s also a potential 28% rate.
TIA.
For an individual,CGT has its own specific tax rates - 10% or 20% for non residential property and 18% and 28% for residential property.
On the face of it, "land" in itself would normally be taxed on the 10% or 20% rates. However, if it is being purchased with residential development in mind, it MIGHT shift into the 18%-28% rates. In fact, if development for housing is the plan, then it might very well be outside Capital Gains Tax rules completely because buying land for development is normally looked on as a trading activity and therefor any profits from such development would be taxed under Income Tax rules rather than Capital Gains Tax rules.
Although independent of Income Tax, the proportion of how much of any capital gain stands to be taxed at the lower or higher CGT rates is very much dependent on your overall income from all sources. If your "salary" or other income already puts you into higher rate Income Tax bands, then ALL of your taxable Capital Gain will be at the higher rates of CGT.
If you income from other sources is only taxed at basic rates of Income Tax, then some of the Capital Gain will be at the CGT lower rates and some at the CGT higher rate. Predicting how the CGT falls into the two CGT bands can be tricky - especially if you are having to submit the CGT using a "real time" electronic system - which is now compulsory for residential property transactions.
On the face of it, "land" in itself would normally be taxed on the 10% or 20% rates. However, if it is being purchased with residential development in mind, it MIGHT shift into the 18%-28% rates. In fact, if development for housing is the plan, then it might very well be outside Capital Gains Tax rules completely because buying land for development is normally looked on as a trading activity and therefor any profits from such development would be taxed under Income Tax rules rather than Capital Gains Tax rules.
Although independent of Income Tax, the proportion of how much of any capital gain stands to be taxed at the lower or higher CGT rates is very much dependent on your overall income from all sources. If your "salary" or other income already puts you into higher rate Income Tax bands, then ALL of your taxable Capital Gain will be at the higher rates of CGT.
If you income from other sources is only taxed at basic rates of Income Tax, then some of the Capital Gain will be at the CGT lower rates and some at the CGT higher rate. Predicting how the CGT falls into the two CGT bands can be tricky - especially if you are having to submit the CGT using a "real time" electronic system - which is now compulsory for residential property transactions.
Then the taxable gain should be charged at either 10% or 20% depending on your other income in the relevant tax year.
Don't forget you will have your annual Capital Gains Tax allowance to offset against any gain before applying the relevant tax rates.
The current annual CGT Allowance is £12,300.
Is the land owned jointly?
Don't forget you will have your annual Capital Gains Tax allowance to offset against any gain before applying the relevant tax rates.
The current annual CGT Allowance is £12,300.
Is the land owned jointly?
This means the gain will be split 50/50 between the two of you and each of you will be able to make use of your individual £12,300 CGT allowances for offset against your share of the gain.
The actual tax (if any) that you each have to pay on the apportioned gains will be different because the proportion of the gain that falls into the 10% and 20% will be different for each of you.
The actual tax (if any) that you each have to pay on the apportioned gains will be different because the proportion of the gain that falls into the 10% and 20% will be different for each of you.
Wow is that right on CGT on resi development land?
Might be best to transact as agri to bake in recent prices at 10-20% on long-held agri land, before selling on to resi developers with that specific uplift then.
One for the solicitors and accountants to advise on a case by case I suppose…
Might be best to transact as agri to bake in recent prices at 10-20% on long-held agri land, before selling on to resi developers with that specific uplift then.
One for the solicitors and accountants to advise on a case by case I suppose…
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