Farmers who let out land for grazing are not entitled to agricultural capital gains tax (CGT) relief unless they retain some occupancy of the land and undertake responsibility for maintaining it, according to a decision of the First-tier Tax Tribunal. HM Revenue & Customs asserted that the grazier had sole occupation of the pasture he had rented as ‘conacre’ (seasonal grazing) and thus relief was not available to the letting farmer. The First-tier Tax Tribunal rejected this however as the court found the landowner occupied and took responsibility for the land but stressed that it too would have denied relief if the landowner had not also used the pasture for his own purposes (Allen v HMRC, 2016 UKFTT 0342 TC).
DND LAW Solicitor Newry
Donnelly Neary & Donnelly offer a full range of legal services including Conveyancing Tax Commercial Criminal Family Law Divorce Wills Probate Immigration Notary Public from offices in Newry Castlewellan Dublin Portadown serving all of County Down Armagh and Belfast For more information visit our offices or telephone 028 30264611 Our website is www.dndlaw.com & www.notaryni.co.uk
Unlocking the Secrets of CGT Relief for Farmers Today
DND Law
Capital Gains Tax (CGT) can be a significant concern for farmers looking to sell, transfer, or pass on their agricultural assets. However, various reliefs are available to reduce or even eliminate the CGT burden, making it essential for farmers to understand how to navigate these options effectively.
One of the most commonly used reliefs is Entrepreneurs’ Relief (now known as Business Asset Disposal Relief), which can reduce the CGT rate to 10% on qualifying business assets, including farmland and buildings used in the business. To qualify, the farmer must have owned the assets for at least two years and meet specific trading conditions.
Another valuable option is Roll-Over Relief, allowing farmers to defer CGT when selling an asset and reinvesting the proceeds into another qualifying asset, such as additional farmland or machinery. This is particularly beneficial when upgrading or expanding farming operations.
Gift Hold-Over Relief is also important, especially for succession planning. It allows farmers to transfer agricultural assets to family members without immediate CGT liability, deferring the tax until the recipient sells the asset.
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Finally, Agricultural Property Relief (APR) and Business Property Relief (BPR) can significantly reduce Inheritance Tax, which often works in conjunction with CGT planning for long-term wealth management.
Understanding these reliefs and how they interplay can save farmers considerable amounts in tax. Consulting with legal professionals, like the team at DND Law, ensures that farmers make informed decisions and fully leverage available CGT reliefs to secure their financial future.
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