Advice on selling farm dwellings before capital gains tax rule change

Capital gains tax (CGT) rules on residential property are being tightened from April 2020, so farmers and landowners should consider completing any planned sales before this deadline, advises experts at Whitley Stimpson.

Under the current regime, CGT must be declared on an individual’s self-assessment tax return, submitted by 31 January each year, for the tax year to the previous 5 April. This effectively allows up to 21 months for payment of the CGT in some cases.

Ian Parker, director at Whitley Stimpson’s Banbury office says: “The main change for farmers and landowners is that CGT will be payable far sooner than under the current rules. From April next year, if any CGT is due, a CGT return must be submitted to HMRC estimating the amount and then payment must be made within 30 days of completion of the sale.”

Under the new regime, if the actual tax due differs from the estimate in the early CGT return, then the balance will be due or refunded following submission of the annual tax return.

“There may be strong arguments to achieve a sale before April 2020,” continues Ian. “Triggers could include where a farm has too much income from letting, so that it falls foul of the Balfour tests for business property relief from inheritance tax.”

“However, one solution may be to attach land to cottage or other residential accommodation sales, so that the buyer can take advantage of mixed-use rates for stamp duty land tax. This effectively lowers their stamp duty tax bill compared with that for a straightforward residential property with no land.”

A further reason to consider a sale is to put a farm on a stronger financial footing in advance of anticipated changes in support when the UK leaves the EU.

Whitley Stimpson has a dedicated Agricultural and landed estates team of specialists working with owners throughout Oxfordshire, Buckinghamshire and Northamptonshire.

If farmers or landowners remain unsure about their options Whitley Stimpson can offer tailored advice to their circumstances and needs.

For further information contact Ian Parker, on 01295 270200 or ianp@whitleystimpson.co.uk.

Whitley Stimpson

Whitley Stimpson Ltd is one of the region's leading independent accountancy and business advisory firms.

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