Land Use and Diversification

Question 1

What is the current rate of CGT?

Answer 1

24% for Residential property, 20% for non-resi. £3k allowance this tax year.

Question 2

Current VAT rate?

Answer 2

20%

Question 3

Income Tax Rate?

Answer 3

20% - £12.5k - £50k
40% - £50k - £125k
45% - £125k +

Question 4

IHT Rate?

Answer 4

40%. Can be reduced to 36% if more than 120% of the net asset value is left to charity.

Question 5

Name 2 important IHT reliefs for farmers/landowners

Answer 5

APR & BPR

Question 6

Explain tax considerations for farm diversification.

Answer 6

APR & BPR are key IHT reliefs for many farmers and landowners. The diversification of farm assets and taking them out of agricultural use may eliminate the eligibility to claim APR. In order to get BPR, the land or buildings must be used wholly or mainly for trading rather than investment purposes. Collecting rent for minimal management or provision of services (e.g. holiday lets) are likely to be considered as investments.

Question 7

What is the IHT nil rate band?

Answer 7

£325,000, rising to £500,000 for a property

Question 8

What is the famous Case Law concerning BPR?

Answer 8

Balfour (2010) - more than 50% of the estate’s overall activity was effectively trading, and therefore 100% BPR applied as the estate was considered a ‘single business’.

Question 9

Name some diversification options

Answer 9

Camping/glamping, events such as weddings, storage lettings, solar, battery storage, wind farms, environmental schemes.

Question 10

SDLT rates?

Answer 10

£250,000 for resi (£425k FTB relief)
£125,000 for non-resi

Question 11

What is entrepreneurs relief?

Answer 11

A CGT exemption reducing tax from 24% to 10%.

Question 12

What is Gift Holdover Relief?

Answer 12

Delaying CGT payment to whoever you have gifted property to. They will inherit the same base value for future CGT liability.

Question 13

Can you tell me what the new government has said in relation to rural diversification?

Answer 13

The new government have made it clear that they want to kick start rural growth. One of their main objectives is their clean energy revolution, which will inevitably provide farmers and landowners the opportunity to diversify into renewable energy. They have also pledged to speed up planning decisions in areas such as renewable energy.

Question 14

What key criteria are there for assessing viability of a diversification project

Answer 14

-Demand
-Financial feasibility
-Planning
-Return on Investment
-Environmental
-Tax

Question 15

Name a key constraint on diversification in the rural area

Answer 15

The planning process - hopefully this will improve with the new government.

Question 16

What planning policy is there to support / restrict diversification in the rural sector?

Answer 16

The NPPF (2021) supports rural diversification, stating that local planning policies should enable the sustainable growth and expansion of rural businesses. This includes supporting rural tourism, farm diversification, and new business opportunities, while maintaining the protection of the countryside and its character. Paragraph 84 specifically encourages the sustainable diversification of agriculture and land-based rural businesses.

Question 17

What is permitted development?

Answer 17

A set of rights in the UK that allow property owners to make certain changes or developments to their land or buildings without needing full planning permission from the local authority.

These rights are defined under the Town and Country Planning (General Permitted Development) (England) Order 2015

Question 18

What is the Use Class Order and how does it relate to Land Use and Diversification?

Answer 18

A system that categorises land uses in the UK.

It’s critical in determining what can be done with land and buildings. Farmers or landowners looking to diversify into tourism, hospitality, or retail must often check the Use Class to determine if the new use is permitted under the current classification.

Question 19

What is a conservation area?

Answer 19

A designated area recognised for its special historic, environmental, or architectural interest. The charater of which is desire to preserve or enhance.

Question 20

What impact does AONB status have on development within that area?

Answer 20

The NPPF states that great weight should be given to conserving and enhancing the landscape and scenic beauty, and that they have the highest status of protection in relation to these issues.

There are tighter planning restrictions with regards to permitted development rights.