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Capital Gain Tax - selling agricultural land in stages

With regards to sole trading losses being offset against Capital Gains: as far as I am aware, such losses can only be offset against capital gains in the same year; meaning that trading losses cannot be carried forward and offset against capital gains in any following year.

I have a client (a farmer) who is likely to make a trading loss of around £35,000 in the year to 5 April 2011.  Similar losses are anticpated in the year to 5 April 2012.  The sole trading activity is then likely to return to a profit in the year to 5 April 2013.  The client is currently negotiating the sale of some agricultural land; being 1 of 3 seperate but ajoining fields.  The sale is likely to result in a capital gain of around £80,000.  The vendor is likely to pay for the field over two years; simply because he can't afford to pay for it in one go.  Because of this, the client assumes the title deeds would either: not register the new owner until full payment had been received, or would register part of the field as and when it's paid for.  I don't really know how this would work.  Incidentally, the Land Registry title treats all 3 fields as one plot, but specifies its division into 3 fields, each seperated by hedge rows.

On the basis of the above: could payment be split over 2 years; meaning half of the field is sold in 2010/11, generating a gain of only £40,000.00, with the remainder applicable to 2011/12, generating a further £40,000?

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By blok
09th Mar 2011 14:34

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Basically the sale of 1 field will be taxable at the point of sale, it wont matter if the receipt of the money is in two stages.  i.e. you will have one disposal.

Which begs the question, why not have two seperate disposals over two years?  (more legal fees obviously).

It is unlikely that any of these gains will qualify for ER.

You need your commercial hat on as well as the tax hat.

 

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