John asks: “A family member is due to sell some land for in excess of £1m. What tax would be payable on this as it has no residential property on it?”

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Q&A 53 – Capital Gains Tax On Land – Shownotes

Today’s question comes from John:

A family member is due to sell some land for in excess of £1m. What tax would be payable on this as it has no residential property on it? Many thanks, John.

 

 

Capital Gains Tax On Land

Thanks for your question John.

Capital Gains Tax is due on the sale of land as per the rules in the article “how to avoid capital gains tax on property”. Rather than going into too much detail today, I’ll let you follow the links in the show notes as we receive a lot of questions on the topic and cover many on the Q&A podcasts.

For example, have a listen to the following episodes if you haven’t already:

Question 5 – Do I Pay Capital Gains Tax On Gifts?

Question 13 – How Do I Minimise My Capital Gains Tax Bill?

Question 23 – Do I Pay Capital Gains Tax If I Don’t Pay Income Tax

Question 41 – Capital Gains Tax On Inherited Property

However, I feel I should go a little deeper into this question because it’s related to the sale of land rather than property in all previous questions.

 

 

No Tax Relief On Land

Because the land has no property on it, it is not anyone’s “home” and hence the PPR and letting relief will not be applicable.

So, the capital gains tax will be due on the sales price, less the acquisition price, less any costs related to the sale of the land and any significant capital improvements made to the land during the period of ownership.

The only relevant exception may be if your family member is planning to use the proceeds from the sale to buy new land.

In this case, they can roll forward the capital gains tax to the new property. However, this is subject to meeting many requirements. For more detail, see this government guidance:

Self Assessment Capital Gains Tax Guidance

Hope that helps John.

 

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