BEWARE OF THE NEW CHANGES WHEN YOU ARE SELLING LAND – YOU HAVE NEW OBLIGATIONS OF COMPLIANCE & PAYMENT TO HMRC
One of the more common questions which I am often asked as a tax accountant, is can I give an asset away and not pay any tax? If I do give this asset away, why do I need to pay tax? Or sometimes, I have already given the asset away and had no idea that I needed to pay tax!
A gift is regarded in tax law as a disposal for capital gains tax purposes and a gift between a parent and his/her children is seen as a gift between connected parties. This is defined in s286 of the Taxation of Capital Gains Act 1992.
This means that the value of the gift or the effective deemed proceeds are in fact the asset’s market value as at the date of the gift. Capital gains tax is then calculated on this transfer.
From April 2020, you should be aware that the capital gains tax on disposals of land which is situated in the UK will be reportable to HMRC and the capital gains tax payable within 30 days of the completion date.
This is going to clearly create some problems in terms of organising the compliance and paying the tax within such a short time frame.
HMRC have proposed an alternative payment option which is to pay the resulting capital gains tax over ten equal instalments. This has to be made to HMRC via a formal election and the first instalment must be paid by the normal due date.
If you require any further information in relation to this area of tax law, please contact Vicky Evans, Director of Babcock Tax & Accountancy Services Ltd on firstname.lastname@example.org.
If you would like our help to understand the implications in more detail for your specific situation, call us today on 02394 003600 or click on the ‘Request Call Back’ button below and we will be happy to have a chat.
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This is Vicky, signing out for now and remember – Behind every good business is a GREAT Accountant!