Capital Gains Tax issues on the Transfer of Farms and Farm Houses
Farming and the land that goes with it has traditionally been passed down from generation to generation. If farmland is farmed in hand or by share or contract farming then the following Capital Gains Tax relief is available:
- Rollover relief on the replacement of land and farm buildings with other qualifying
business assets and vice-versa
- Holdover relief on gifts, even where the farmland is tenanted, provided that it would
qualify for APR
- Entrepreneurs’ relief on certain qualifying disposals
The final relief, Entrepreneurs’ relief was introduced on 6 April 2008. This scheme gives an effective tax rate of 10% on certain business disposals, up to a lifetime limit of £1 million of gains per individual. Farmers who have bought land following the introduction of the Single Payment (SP) regime on 1 January 2005 should be aware that part of the cost could relate to the purchase of SP entitlement, which is separate from the land. The disposal of SP entitlement will be treated as a separate asset for capital gains purposes.
Our Agricultural Law specialists are on hand to lead you through the taxation minefield. Working with your accountants we can help to manage your expectations as well as your liabilities.
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