Taxation

22 June 2010 Budget Analysis:

Read the CLA’s Chief Taxation Adviser Adrian Baird's analysis of the Coalition Government’s first budget.

The CLA Taxation Department is concerned with all aspects of national taxation that affect land transactions conducted in England & Wales.

It is primarily concerned with the following taxes:

Inheritance Tax (IHT):
This taxes estates on death and lifetime gifts made within 7 years of death. Certain other gifts – known as gifts made with a reservation of benefit - made after 18th March 1986 are also caught even where made more than 7 years before death. Some very valuable reliefs are available, principally for agricultural and business property.

Capital Gains Tax:
This taxes gains arising on the disposal of assets (which may be made by way of sale or gift). There are exemptions (eg, for main residences) as well as for certain disposals involving businesses and business assets, including shares in family companies (entrepreneurs’ relief) as well as reliefs that defer the tax on gifts (hold-over reliefs) or where proceeds are reinvested (roll-over reliefs).

Income Tax:
This taxes all forms of income.  The CLA’s primary concern is how it taxes income from land (eg, property income) or income derived from activities conducted on the land (eg, farming) and the boundary between the two.

Value Added Tax:
Unlike other taxes many of the concepts of VAT are grounded in European concepts. This makes the application of VAT to land transactions particularly complex as European land concepts can be very different to those used in England & Wales.

Stamp Duty Land Tax:
This tax replaced most Stamp Duty levies in 2003 and 2004. It has increased compliance burdens on landowners as it is a highly complex tax on land transactions.

Pre-owned assets:
Although an income tax charge, the scope of the provisions are largely based on inheritance tax concepts and they may rightly be viewed as a separate tax. The charge is principally aimed at defeating various inheritance tax avoidance schemes, but, unfortunately, may also capture more innocent transactions.

The Free CLA Tax Advisory Service

CLA members and their professional advisers may access this service on specific questions arising directly out of their CLA-registered landownership where the land is situated in England and Wales.

Professional and Business members may also access this service in respect of general enquiries concerning land based transactions in England and Wales - for fact specific enquiries concerning clients, the client needs to be a CLA member in order to access the service.

Although simple questions may be raised by telephone 020 7235 0511 or by e-mail to jane.hill@cla.org.uk , proper advice will often depend upon our advisers having a detailed summary of the facts and this is best provided by letter. Advice in writing will only be given where the enquiry is made in writing.

Recent Developments

June 2010 Budget Analysis

Budget 2009
Furnished Holiday Lettings
Rural Diversication Project

Guide to VAT for shoots
Working in conjunction with HMRC, the CLA and other fieldsports organisations, BASC has produced a guide to VAT for shoots the test of which has been approved by HMRC.
Go to BASC website to download guide

Single farm payment and single farm payment entitlement.
A very good summary of the taxation of both payments and the entitlement can be found in HMRC’s Tax Bulletin (June 2005, special edition) accessible from this link: http://www.hmrc.gov.uk/bulletins/tb-se-june05.htm

Inheritance tax and farmhouses. (Antrobus)
The decision of the Lands Tribunal in the Antrobus case (October 2005) is examined in the following article
Click here to view the article

The decision in the first Antrobus case (2002) giving details of what makes a farmhouse agricultural property is examined in the following briefing note
Click here to download the briefing