Tax free gains on sale of land?

Category: Agriculture - Posted On: Aug 31 2017


We often have clients who sell off small pockets of land, with the land normally being acquired by someone wishing to expand their garden or improve access to their property for example.

We often have clients who sell off small pockets of land, with the land normally being acquired by someone wishing to expand their garden or improve access to their property for example. For an individual such a disposal would be subject to capital gains tax (CGT). The gain may be small enough to be covered by the annual CGT allowance, which amounts to £11,300 in the current tax year. However, what happens if you have already used your allowance against other gains in the year or the gain exceeds the annual allowance? Luckily, there is a little known relief available, known as relief for small part disposals of land, that potentially allows such gains to be taken tax free where three conditions are met, namely:

  • The consideration does not exceed 20% of the value of the entire holding at date of sale
  • Proceeds are less than £20,000
  • Total proceeds from all such disposals are less than £20,000 per tax year

If relief is claimed then any proceeds are just deducted from the original base cost of the land, thereby potentially increasing the tax due on future disposals. However, if there is no intention of ever selling the remainder of the land then the tax is effectively postponed indefinitely.

If you are likely to be selling off small pockets of land then speak to your normal EQ contact to see if the proceeds can be received tax free.