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  #21  
Old 15.12.2015, 00:49
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Re: Inheritance of land and Capital Gains

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What revenue?
Her Majesties Revenue & Customs, previously called the Inland Revenue. & often referred to as the revenue, being such an esteemed expert on Uk taxation I assumed you would understand what I was talking about.

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We did not, all parties assumed the land was nice to have but pretty much worthless, at no stage did anyone question that assumption, taxmen included.

It's pretty much since that the UK has started to realise they may have a problem with housing that anything happened, in the area it's situated, there's a shortage of land allowed for housing and there's a mandate to increase housing in the area.

The land used to be run as part of a market garden, but since fifty years or so, was not part of any kind of profitable business, it's situated in between some major roads that make it unsuitable to become a part of a larger farming complex, and as stated before, is not zoned for housing.

As far as anyone knew it was worthless and I was told, was only worth something in the thousands, if that. It simply wasn't worth paying a lawyer or surveyor to appraise it.

However, recent developments have made it worth a hell of a lot more, and I don't think it's a standard appreciation of value, the land would not have appreciated to the value it is now by just leaving it alone. By a combination of good luck and family ties, the land is worth substantially more than if I were an independent actor letting it be. That appreciation happened recently, I don't want to avoid tax, but I don't want to pay more than I have to....
You now will need to get a valuation for the date at death of the previous owner & very possibly a 1982 valuation if the death occurred before 1982.

Unless you have been out of the U.K. for 5 full tax years you are potentially liable to CGT on your gains from inheritance until sale or if you return within 5 years of your original departure. If you will be away for 5 years you then will also need a 5 April 2015 valuation.

Surveyors valuation fees are based on the actual valuation, it's always a good idea to get it done at the time for proof the estate was correctly valued at death.

Last edited by fatmanfilms; 15.12.2015 at 01:20.
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  #22  
Old 15.12.2015, 01:03
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Re: Inheritance of land and Capital Gains

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You now will need to get a valuation done for 5th April 2015, also for the date at death of the previous owner & very possibly a 1982 valuation for UK residents liable to CGT if it's been owned since than as that is used as a base value for old transactions.
Thanks, I'll look into it.

There was a great deal of trouble with the land and registry, it's all now properly registered, but I can't stress enough how much the land was neglected in terms of value in the family, around 50K was spent on just making sure we actually owned the land (we do) and making sure it was all correctly registered. Getting a value from 1982 seems ridiculous...

I'm trying to think now from when it was passed on, in 1982, my grandad would still have owned it, inherited from his father, but it was no longer the business that sent my grandfather to university and had long since been a profitable bit of land.
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Old 15.12.2015, 01:27
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Re: Inheritance of land and Capital Gains

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Thanks, I'll look into it.

There was a great deal of trouble with the land and registry, it's all now properly registered, but I can't stress enough how much the land was neglected in terms of value in the family, around 50K was spent on just making sure we actually owned the land (we do) and making sure it was all correctly registered. Getting a value from 1982 seems ridiculous...

I'm trying to think now from when it was passed on, in 1982, my grandad would still have owned it, inherited from his father, but it was no longer the business that sent my grandfather to university and had long since been a profitable bit of land.
I rewrote my previous post as it's more complicated than I previously thought as I don't know when you stopped being UK tax resident.

All costs you spent can be deducted from gains, if you spent 50k, you can't have believed the land had zero value........

If land was purchased in 1960 for 1 being able to use a 1982 base value would be very appealing, which is why I brought it up, I have no idea your age & 1982 is only 33 years ago.
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  #24  
Old 15.12.2015, 02:03
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Re: Inheritance of land and Capital Gains

Well yeah, the 50K was also partly funded by the developers, and split across my family. I have a relatively small share of the land, recently increased due to the death of another relative, but still less than 10%. All those costs have been broadly shared across family members based on percentage ownership of the land.

In a way you're right, as soon as the developers approached us, we realised to get the deal through would cost a certain amount upfront from our side, no one approaches you with the offer to purchase land out of the goodness of their hearts, so we contracted a law firm to represent us.

I understand that the rate of increase and the value at which we got it is an issue, it's just so very difficult to work out as it's been passed around the family informally, and I now realise we have to work out what our legal liablilty is. There was no valuation done, the land fell out of use in it's original purpose, and my ancestors decided to hold onto it and just pass down the deeds without any thought of it's value.
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Old 15.12.2015, 02:16
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Re: Inheritance of land and Capital Gains

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Her Majesties Revenue & Customs, previously called the Inland Revenue. & often referred to as the revenue, being such an esteemed expert on Uk taxation I assumed you would understand what I was talking about.



You now will need to get a valuation for the date at death of the previous owner & very possibly a 1982 valuation if the death occurred before 1982.

Unless you have been out of the U.K. for 5 full tax years you are potentially liable to CGT on your gains from inheritance until sale or if you return within 5 years of your original departure. If you will be away for 5 years you then will also need a 5 April 2015 valuation.

Surveyors valuation fees are based on the actual valuation, it's always a good idea to get it done at the time for proof the estate was correctly valued at death.
I have been out of the UK for close 10 years and considering a swiss passport.

I missed your edit, it was really valuable information, a repost would have been better I think!
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Old 15.12.2015, 03:05
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Re: Inheritance of land and Capital Gains

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Her Majesties Revenue & Customs, previously called the Inland Revenue. & often referred to as the revenue, being such an esteemed expert on Uk taxation I assumed you would understand what I was talking about.
Lol, nice attempt at a save.
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Old 16.12.2015, 19:54
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Re: Inheritance of land and Capital Gains

In light of the reasonable questions, gonna restate my position.

I'm a UK native but resident in Switzerland for nine years, at no point could it be considered in that time that I lived in the UK.

I inherited some land in the UK some five years ago as part of a larger tract owned by family members, it was generally considered within the family to be nice to have, but ultimately valueless, the land was never valued and did not incur any taxes as part of inheritance tax, as far as we know, the UK taxman is entirely in agreement with the situation. The land is situated in a green belt area and can't be developed for housing.

I received a token amount of rent from a legacy renter, that amount was literally not even enough to buy a pint at the end of the year. The rent did not include any kind of residential housing, the closest approximation is that it was an allotment and I stored a lawnmower. The land is classified as agricultural but is nowhere near profitable as any kind of business.

However, in the last couple of years we (the family) were approached by a development company, they were looking to move an existing sports ground in order to develop housing on land of an existing sports ground not in the green belt, while the exact details of the deal are complex, it basically amounts to the fact that the developers want to build houses, community facilities must be moved, and our lands offer the perfect solution.

As such, in conjunction with the developers, we applied for planning permission for our land to be used as a sports ground, which is totally within the restrictions for land zoned in green belt. With the aid of the original sports club and the developers, that planning permission looks to be going ahead. The developers aided in other costs like land registration in order to smooth the deal, the developers invested a not insignificant sum such that we're confident they're just as interested in the deal as we are.

The deal is pretty much foregone, I'm not worried about the legalities or ins and outs of the deal, but my UK siblings face capital gains tax on the deal as a significant rise in the value of the land occurred.

I do not wish to avoid tax, I have access to a a firm of lawyers brokering the deal but who are not lawyers dealing in Anglo-Swiss tax situations, I just need to ask them the right questions on values, but am unsure as to what exactly those question should be.

Do I need to pay capital gains, and if so, at what point and at what value do I make the calculation?

My brother is looking into the value at the time of probate, but as far as I know, the land value didn't raise to the amount we've negotiated until the developer got involved, so we need to work out a natural appreciation until they got involved, and then the appreciation after, did the value of the land raise when the developers approached us? or is it when we get planning permission to develop what they want?
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Old 16.12.2015, 20:39
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Re: Inheritance of land and Capital Gains

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In light of the reasonable questions, gonna restate my position.

I'm a UK native but resident in Switzerland for nine years, at no point could it be considered in that time that I lived in the UK.

I inherited some land in the UK some five years ago as part of a larger tract owned by family members, it was generally considered within the family to be nice to have, but ultimately valueless, the land was never valued and did not incur any taxes as part of inheritance tax, as far as we know, the UK taxman is entirely in agreement with the situation. The land is situated in a green belt area and can't be developed for housing.

I received a token amount of rent from a legacy renter, that amount was literally not even enough to buy a pint at the end of the year. The rent did not include any kind of residential housing, the closest approximation is that it was an allotment and I stored a lawnmower. The land is classified as agricultural but is nowhere near profitable as any kind of business.

However, in the last couple of years we (the family) were approached by a development company, they were looking to move an existing sports ground in order to develop housing on land of an existing sports ground not in the green belt, while the exact details of the deal are complex, it basically amounts to the fact that the developers want to build houses, community facilities must be moved, and our lands offer the perfect solution.

As such, in conjunction with the developers, we applied for planning permission for our land to be used as a sports ground, which is totally within the restrictions for land zoned in green belt. With the aid of the original sports club and the developers, that planning permission looks to be going ahead. The developers aided in other costs like land registration in order to smooth the deal, the developers invested a not insignificant sum such that we're confident they're just as interested in the deal as we are.

The deal is pretty much foregone, I'm not worried about the legalities or ins and outs of the deal, but my UK siblings face capital gains tax on the deal as a significant rise in the value of the land occurred.

I do not wish to avoid tax, I have access to a a firm of lawyers brokering the deal but who are not lawyers dealing in Anglo-Swiss tax situations, I just need to ask them the right questions on values, but am unsure as to what exactly those question should be.

Do I need to pay capital gains, and if so, at what point and at what value do I make the calculation?

My brother is looking into the value at the time of probate, but as far as I know, the land value didn't raise to the amount we've negotiated until the developer got involved, so we need to work out a natural appreciation until they got involved, and then the appreciation after, did the value of the land raise when the developers approached us? or is it when we get planning permission to develop what they want?
As you left the UK 9 years ago you would have no liability to CGT on gains of any sort in the UK up until 5 April 2015. There was a change on 6 April 2015 for sales of 'Residential Property'. Looking at this link it's probably not included, but that may not be the case, tax law can get very complicated. http://www.hmrc.gov.uk/manuals/rpsmm...sm07109060.htm

The worst case is you could be liable to CGT for any increase in value since 6 April 2015. As it would seem there was no event that caused the value of the land to increase this year any liability should be low. I would get a valuation for 5 April 2015, & then decide if you need to take professional advise.

Your siblings will be liable to CGT on the value increase for their share since the date it was inherited, they will need a valuation of the land on the date of death.

If the Land is sells for say 5 million, you should immediately take professional advise as the HMRC will likely look at transaction in some detail. It's likely they will think it was under valued 5 years ago at death. The professional valuation will be a good place to start negotiating from.
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Old 16.12.2015, 20:44
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Re: Inheritance of land and Capital Gains

Thanks, while it's not a foregone thing, planning approval would go through in the next couple of months, and I'm thinking that that is when the value increases, so gains may well be in the time limit you specify.

But yeah, tax law is complicated, I may need to contract someone, just need to work out if it's worth it....
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Old 16.12.2015, 20:49
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Re: Inheritance of land and Capital Gains

I'm quite tired, so maybe my brain isn't functioning tonight, but I can't see what difference the timing of the appreciation would make to your tax situation. You inherited the land five years ago (with a nominal value close to zero), after you left the UK, and it appreciated in value after that point. Most of the increase in value occurred either after the developers approached you or once you obtain planning permission either way, some time after you inherited it. So your capital gain is your share of the sale price, less the value at time of inheritance. That last part is the bit you have to determine, which in all fairness is not affected by the developers as they approached you after you acquired the land.

Presumably the sale price is known, so the first part of the calculation is easy. By the way, to answer your question, the value of property is never known until an offer to purchase is accepted, or a registered valuer provides a valuation.

As far as I can see, all you need is a valuation (by a registered valuer) of the land as at five years ago. Unfortunately this won't reflect the developers' interest unless you can convince the valuer that your family saw them coming!
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Old 16.12.2015, 20:49
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Re: Inheritance of land and Capital Gains

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Thanks, while it's not a foregone thing, planning approval would go through in the next couple of months, and I'm thinking that that is when the value increases, so gains may well be in the time limit you specify.

But yeah, tax law is complicated, I may need to contract someone, just need to work out if it's worth it....
I think you could argue planning permission could have been given at any time, it just had not been applied for. The use that the land can be put did not change in the last year.
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Old 16.12.2015, 20:54
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Re: Inheritance of land and Capital Gains

FMF's right, your ex-UK status certainly affects the whole calculation. Ignore most of what I wrote.
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Old 16.12.2015, 21:00
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Re: Inheritance of land and Capital Gains

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I think you could argue planning permission could have been given at any time, it just had not been applied for. The use that the land can be put did not change in the last year.
Bloody hell, you're right of course, to me it's a subjective nightmare, the land was valueless, then the developers approached us and there was a possibility of value, we decided to organise as a family and the developers got on board, more money was invested but nothing was certain, local campaign groups were organsised to petition for it all to go through and we're at the point where it looks like it's all gonna happen and we made no plans for it!

To further screw things up in the future, our lawyers were wise enough that if the land got rezoned for residential use, we'd get a share of that too..
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Old 16.12.2015, 21:15
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Re: Inheritance of land and Capital Gains

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I'm quite tired, so maybe my brain isn't functioning tonight, but I can't see what difference the timing of the appreciation would make to your tax situation. You inherited the land five years ago (with a nominal value close to zero), after you left the UK, and it appreciated in value after that point. Most of the increase in value occurred either after the developers approached you or once you obtain planning permission — either way, some time after you inherited it. So your capital gain is your share of the sale price, less the value at time of inheritance. That last part is the bit you have to determine, which in all fairness is not affected by the developers as they approached you after you acquired the land.

Presumably the sale price is known, so the first part of the calculation is easy. By the way, to answer your question, the value of property is never known until an offer to purchase is accepted, or a registered valuer provides a valuation.

As far as I can see, all you need is a valuation (by a registered valuer) of the land as at five years ago. Unfortunately this won't reflect the developers' interest unless you can convince the valuer that your family saw them coming!
Your not understanding,probably because you have not read what I wrote in previous posts, so I will repeat just for you:-

1) the OP has no liability to CGT from inheritance to 5 April 2015

2) the OP possibly has a liability to CGT from 6 April 2015 depending on the following:-

a) Is this land included in the change in expats taxation of residential property

b) has the land increased in value since 6 April 2015
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FMF's right, your ex-UK status certainly affects the whole calculation. Ignore most of what I wrote.
Sorry to late
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To further screw things up in the future, our lawyers were wise enough that if the land got rezoned for residential use, we'd get a share of that too..
No thats very good, I don't think that will be taxable to you at all if non resident. It's not a idisposal so does not come under UK CGT in my opinion.
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