Rural Taxation

Question 1

What are the rates for CGT?

Answer 1

For lower (basic rate) taxpayers (sub £50,270) = 10% for chargeable assets 18% for residential properties

For higher rate taxpayers (over £50,270) = 10% for chargeable assets, 28% for residential properties

Question 2

What is the CGT annual allowance?

Answer 2

£12,300

Question 3

What is the rate of BPR?

Answer 3

100%

Question 4

When does BPR apply?

Answer 4

1. a qualifying TRADING business
2. land used wholey or mainly for the purposes of business
3. Land must have been held for longer than two years

Investment property does not qualify

Question 5

What case sets the BPR trading vs investment income?

Answer 5

Balfour

Question 6

What are the main APR cases?

Answer 6

Antrobus 1&2 (Character appropriate)
Golding (Size)
Mckenna

Question 7

What is the relief given by APR?

Answer 7

100% owner occupied.

let on an AHA is 50%

let on FBT is 50%

Question 8

What is APR relief on?

Answer 8

The AGRICULTURAL value of land, depends on location if this is full value or not. Land must have been owner occupied for two years for it to apply or owned and let for 7 years.

Question 9

What is the IHT Nil Rate Band?

Answer 9

£325,000

Question 10

What is the IHT rate

Answer 10

40% on chargeable assets on the date of death

Question 11

What is exempt from IHT?

Answer 11

Transfers between spouses
Annual exemption £3k
Small gifts

Question 12

What is the threshold of SDLT?

Answer 12

£250,000

Question 13

When do you pay SDLT?

Answer 13

When you buy a property, buy a new leasehold, buy a property through shared ownership or are transferred land or property in exchange for a payment.

Question 14

What are the VAT rates?

Answer 14

20% = standard
5% = reduced rate

Question 15

What are the new stamp duty rates (effective 23 Sept)

Answer 15

Question 16

What are the new stamp duty rates (effective Nov)

Answer 16

up to £250k = 0%
£250k - £925k = 5%
£925k - £1.5m = 10%
£1.5m + = 12%

Question 17

What are the APR Farmhouse Character Appropriate Tests?

Answer 17

• Appropriate size and layout.
• Proportionate to farming enterprises.
• Is it a house with land or land with house?
• Would reasonable person consider it?
• Elephant test. You know one when you see one.
• History of farming on holding.
• Is value significantly out of proportion to profitability of land?
• Scale of agricultural operations in context.

Question 18

What does BPR relive from IHT?

Answer 18

Up to 100% relief for relevant business property
● Business of interest in a business
● Unquoted shares
● Quoted shares giving control
● Land, building machinery or plant used wholly or mainly for purposes of business
Property as investment does not qualify
Must be held for 2 years
100% relief for interests in business or unquoted shares
50% assets used in business or quoted shares

Question 19

What is Business Asset Disposal Relief? (BADR)

Answer 19

Business Asset Disposal Relief (BADR), previously called Entrepreneurs’ Relief, is a capital gains tax (CGT) relief intended to incentivise individuals to grow and invest in their businesses, representing a valuable source of relief for higher and additional rate taxpayers.

Business Asset Disposal Relief means you’ll pay tax at 10% on all gains on qualifying assets.

Question 20

What are the eligability criteria for Business Asset Disposal Relief?

Answer 20

This relief applies when your selling all or part of your business

Must be sol trader or business partner, and have owned business for at least two years

Corporate bodies, such as companies, are not eligible for BADR and, as the relief is targeted at business assets, BADR will not be available to taxpayers on the disposal of investment assets.

Question 21

What are the limits for Business Asset Disposal Relief?

Answer 21

Lifetime limit of £1m

Question 22

What are the CGT exemptions?

Answer 22

• Main Residence is usually exempt (Private Residence Relief)
• Business Asset Disposal Relief (if relevant)
• Business Asset Rollover Relief (if relevant)
• Gift Hold Over Relief

Question 23

What is Business Asset Rollover Relief

Answer 23

A relief allowing you to delay paying Capital Gains Tax if you:

• sell (or ‘dispose of’) some business assets
• use all or part of the proceeds to buy new assets

Question 24

What is ATED

Answer 24

Annual Tax on Enveloped Dwellings (ATED) is a tax on company owned dwellings. It applys to properties worth over £500k.

Question 25

Antrobus 1 V CIR - what was established?

Question 26

What are the 5 Antrobus Tests?

Answer 26

1. Is the house appropriate by reference to its size, content and layout, with the farm buildings and the particular area of farmland being farmed
2. Is the house is proportionate in size and nature to the requirements of the farming activities conducted
   on the agricultural land or pasture in
   question
3. one knows one when one sees it (elephant test)
4. Is the educated rural layman would regard the property as a house with land or a farm
5. how long the house in question has been associated with the agricultural property and whether there was a history of agricultural production

Question 27

When is 50% APR Chargeable?

Answer 27

When the property was let prior to 1st September 1995

AHA re-grants to FBT’s, AHA re-grants to AHA’s are therefore 100% relief, however rent act, AAO’s etc. are likely to be 50% APR.

Question 28

What qualifies for BPR?

Answer 28

• Property consisting of a business or interest in a business: 100% relief
• Control holdings of unquoted securities in a company: 100% relief
• Unquoted shares (not on FTSE 100) in a company: 100% relief
• Control holdings of quoted shares in a company: 50% relief

Question 29

What are the reliefs from ATED?

Answer 29

Properties which are:
* Being redeveloped or held as stock for resale by a property developer.
* Held by property rental businesses and let out to a third party on a commercial basis.
* Farmhouses occupied by working farmers.
* Held by trading companies for the use of employees in the trade.