Farmers exploiting loophole in tax

12 August 1998

Farmers ‘exploiting loophole’ in tax

FARMERS selling land for development are exploiting a tax loophole to reap windfall profits, says the newly-formed Anti-Greenfield Development Association.

The pressure group says capital gains avoidance is acting as an incentive for builders to “wreck” more than 12,141ha (30,000 acres) of rural land every year.

According to the association, if a farmer earns £4 million by selling 8ha (20 acres) for housing he should by rights pay £1.5m in capital gains tax (CGT). However, he can escape payment if he buys another parcel of farmland within three years with his £4m “windfall”. In the meantime, he can use this money to invest in stocks or other ventures. This is allowed via CGT roll-over-relief.

• Financial Times 12/08/98 page 6 (News Digest)