Land sales critical with regards to tax
Land sales critical with regards to tax
TAX bills for those hoping to retire from farming could be up by thousands of £s as foot-and-mouth restrictions curb dispersal and land sales, although swift action can still avert a financial crisis.
The main implication will be felt by those looking to cash in on this years higher capital gains tax relief of £150,000 on sales of assets such as land, buildings or quota. From Apr 6, relief will be cut by a third in line with the introduction of new business taper relief.
According to Mike Harrison, partner in charge of accountants Saffery Champnesss north west office, those most at risk are producers with capital gains between £100,000-£150,000.
"At this level the disposal of assets ought to be made before the end of this tax year on Apr 5. If carried over into 2001/02 the additional tax liability will be £12,500."
With just a week remaining of the current tax year producers must act fast, he adds. If sales have been postponed, retirement relief can still be triggered using arrangements involving trusts without a physical sale taking place, says Mr Harrison.
But where capital gains are under £100,000 or exceed £150,000 no extra penalty will be incurred by holding assets over into the next tax year. "In actual fact producers will gain an extra 12 months before tax is due," adds Mr Harrison. *