All Change

1st February 2008

T. Wyn Jones

On 9th October last year Mr Alistair Darling set out on a journey to raise more money for the Exchequer by changing the allowances available for Capital Gains Tax. The changes were, I am informed, in part an attempt to catch the private equity bosses who are able to treat Capital Gains Tax as income thus paying significantly less tax than us lesser mortals. However, in reality what was proposed was a blanket taxation catching people from all walks of life.

But it’s all change. Due to considerable pressure from varying quarters Mr Darling has recently outlined a “Entrepreneurs Relief” which gives some breathing space for property and businesses owners alike.

In brief the Chancellor will tax gains of up to £1 million at 10% with gains over and above this figure at the new proposed standard rate of 18%. This relief is available for agricultural land owners, business owners and investors - full details may be obtained from the website - http://www.hmrc.gov.uk/cgt/disposal.htm

So, a sigh of relief from all concerned but as is always the case there are some worse off – Landowners and Farmers, and some better off - the Taxman.

Under the current taxation system there is little or no tax to pay on agricultural land sales (unless the land is sold for development) due to indexation, which takes into account inflation. However under the proposed system this will end with tax becoming payable on any gain inflationary or otherwise – at the Entrepreneurs’ Relief rate of 10%.

So if there are any landowners out there thinking of selling in the near future it would be prudent to speak to your Accountant and Agent as a matter of urgency. Perhaps you should consider selling before April 6th!

If you require advice on this matter please contact your nearest McCartneys Office or ring me on 07702 722905.