Tag Archive: business
Capital Gains Tax causes a lot of confusion in the United Kingdom. Currently, what are you required to pay capital gains tax on and how much are you required to pay? James Carruthers, Associate, explains the basics.
What is Capital Gains Tax?
Capital Gains Tax is a tax on the sale profit when you dispose of something that has gone up in value. Disposing of something means:
- a sale
- gifting or transferring it to someone else
- trading it in exchange for something else
- getting compensation for it i.e. an insurance pay out
Capital Gains Tax in Property
Let’s say you bought some land for £50,000 and subsequently sold it for £150,000; Capital Gains Tax would be due on the £100,000 profit. Don’t worry, you only have to pay if you make a profit when disposing of a property that isn’t your home. For example:
- buy-to-let properties
- business premises
- inherited property
It is very common for property to be transferred as inheritance. When inheriting an asset, any application Inheritance Tax will usually have been paid by the deceased estate, however, you may be required to pay capital gains tax if you later dispose of the asset you inherited.
What am I Likely to Pay?
The amount you pay depends on the level of your annual taxable income, the level of profit/gain you have achieved, as well as any tax reliefs that you may be entitled to.
If you’re a higher rate taxpayer, Capital Gains Tax is equal to 28% on any profit/gain from residential properties which are not your main residence, and 20% on any profit/gain from other assets. You may still also need to pay capital gains tax on assets which sold at a loss if your total taxable gains for the year exceed the tax-free allowance.
For any property assets that have been owned for a long period of time, any Capital Gains Tax due will be based upon the property’s value as at the 31st of March 1982 rather than the date of acquisition.
Reliefs from Capital Gains Tax are available to help defray the amount of tax that is to be paid; including the likes of Entrepreneurs Relief and Retirement Relief.
How can we help?
If you have disposed of a property asset using any of the aforementioned methods, you need to submit a market valuation of the property which will be reviewed by the Valuation Office Agency (VOA) on behalf of Her Majesty’s Revenue and Customs (HMRC).
It’s therefore vital that robust valuations are prepared that can stand up to scrutiny under the VOA review process, and that provide an appropriate depth of evidence in which to challenge or raise a dispute if necessary.
At George F. White, we have a skilled team of RICS-Registered Valuers who have the experience and expertise of preparing high standard Capital Gains Tax valuation reports that accord with the necessary industry standards.
For more information about our commercial property services, please visit our commercial property pages.
We invite you to join us at our GFW Road Show.
Our agricultural, planning, architectural, agency and commercial teams will be discussing the opportunities for rural businesses to improve performance and reduce risk within these uncertain times.
- Characteristics of top performing farms
What they look like and how to get there
- Buying and selling land
What the future holds in these uncertain times
- Your land, your rights
Dealing with utility access and maximising your compensation
- Planning and Development
Your opportunities, now, and in the future
This is an excellent opportunity for you to understand the current state of the rural business industry as well as meeting our team and receiving expert advice in regards to your next step.
Dates and Venues
Mon 18th Feb – Northallerton Rugby Club, Northallerton DL6 2QF
Tue 19th Feb – Sedgefield Racecourse, Sedgefield TS21 2HW
Wed 20th Feb – Alnwick Rugby Club, Alnwick NE66 1BE
Mon 25th Feb – Duns Rugby Club, Duns TD11 3QQ
Mon 25th Feb – Pocklington Rugby Club, Pocklington YO42 2LP
Tue 26th Feb – Tynedale Rugby Club, Corbridge NE45 5AY
- 18.00 Welcome
- 18.30 Presentation
- 19.30 Light Refreshments
If you would like to attend, please RSVP by following the link.
For more information, please email Emma Gillespie-Payne or call 01665 600164.
With the rural sector facing both challenges and opportunities in the coming years we look at one individual who has taken a very different approach to diversification.
Over the past few years, George F. White have been delighted to support a number of awards across the region. We have been proud to learn about, and meet, many outstanding individuals and businesses in the rural sector.
From established traditional farming businesses through to diversification projects, and even individuals beginning their journey, the experience of being involved in regional awards, meeting the faces behind the stories, is a fascinating insight into the breadth and depth of skills and entrepreneurial spirit on our doorstep.
In early 2018 we were delighted to be part of the judging team for the Northern Farmer Awards, through our sponsorship of the Outstanding Achievement Award. Following many hours of deliberation amongst the knowledgeable and experienced panel, the winners were decided upon.
Whilst all those shortlisted, and of course the eventual winners, each are worthy of individual praise, there was one entry that stood out from the rest… that was Denys Fell who runs a farm near Hull in East Yorkshire.
Denys farms approximately 270 acres, mixing both organic arable and livestock in addition to fruit and nut trees, potatoes and cut flowers. However, it is not his endeavours in growing wheat or managing the flock of 200 sheep that stood out, but rather his diversification project, a community care centre based on Densholme Community Care Farm which really captivated the judges.
Denys saw the impact of the Foot and Mouth crisis in 2001 and was determined to help farmers struggling with loneliness, isolation and mental health issues, but he wasn’t really sure how.
Almost a decade ago, he invited three young men with profound mental health issues, living in a local care home, to visit the farm to help plant potatoes. Denys immediately saw the benefits of how the farm could provide assistance to those with disabilities, mental health issues, learning difficulties or suffering from addictions. The seed was planted.
Denys set up Densholme Community Care Farm, separate to his farming business, as a social enterprise which now employs ten people and looks after over 70 students per day. All the students have disabilities, mental health issues or learning difficulties and attend for up to four days per week on an entirely voluntary basis.
Denys is incredibly proud of the success of the project; how it has allowed the students to develop friendships, learn new skills and visibly grow in confidence.
It was telling that, for the Outstanding Achievement Award, the judging panel were unanimous in Denys being the winner. It was certainly no surprise on the night when he went on to pick up the Northern Farmer of the Year Award.
Diversification is a topic of significant debate at the moment with Brexit likely to bring about both new challenges and opportunities for those in all business sectors, but particularly rural enterprises. Understandably with much focus being on the efficiency and profitability of such businesses, it is all the more reason that the project undertaken by Denys Fell stood out above many impressive stories from all of the nominations.
To learn more about Denys Fell and the Densholme Community Care Farm, click here.
It is fair to say that, so far, 2018 has been interesting and far from consistent in terms of the BREXIT uncertainty, the commodity markets, and of course, the weather. Combined, they have caused an uncertainty for farmers around their business stability. We sat down with Partner, Simon Britton, to discuss what can be done in order to remove the guess work that many business owners face in the current climate.
The Beast from the East hit us in late February and March and will be remembered for many years and for many reasons. The farming sector is still suffering with the consequences of record snow fall and a delayed spring. 250,000 lambs loses were reported over the months of March, April and May and a delayed spring caused havoc in regards to predicting the success of the harvest. We were then faced with (and are still going through) the longest spell of hot weather since 1976; with forage supplies drying up, some of our clients have had to rely on their winter stocks. NFU president, Minette Batters, stated that “This unprecedented spell of weather really should be a wake-up call for us all. It’s a timely reminder that we shouldn’t take food production for granted. Farming is one of the most affected industries when it comes to managing volatility.”
Late last month, the Bank of England announced a base rate increase from 0.5% to 0.75%; the highest level since March 2009. There are, of course, benefits here for those saving; however, with mixed harvest reports and unstable commodity prices, there is an overall atmosphere of uncertainty for those farmers with loans on a variable rate. It has been suggested that interest rates may rise again, not once, but twice, before 2021, taking rates to 1.5%. I have a theory that the Bank of England, with these base rate rises, could be creating a buffer to be utilised in case of a hard BREXIT.
Wheat prices are at nearly £200 per tonne, whilst good news for arable farmers, this will no doubt put further pressure on livestock farmers already short of forage looking to buffer feed. It is hoped that arable farmers do not use this increase in income to mask under performance of their businesses which fundamentally need addressing.
I am not all doom and gloom! There is advice out there and measures that can be put in to place to ensure your business is resilient enough to face the challenges we are up against in this period of uncertainty; and you don’t have to do it all yourself.
I cannot stress enough how important it is to understand your business and how it operates on a financial footing; you would be very surprised at how few people know their business as well as they think they do. This is for a number of reasons, but namely, how much the industry has evolved over the past 10 years. The weather, interest rates and commodity prices are currently in the limelight, however, the impending BREXIT deal, as well as global politics, is set to dictate a change in the way we run our businesses. We must be proactively planning ahead, essentially future proofing our businesses in order to survive.
Initially, I would suggest:
- Assess your business in real time, regularly reviewing output, cost and performance;
- Undertake accurate budgeting and cash flow analysis in order to understand annual cash surpluses/deficits;
- Make informed decisions, utilising sound financial assessment and analysis criteria.
We have a diverse range of clients, all with different needs in regards to farm business management. In order to meet their demands, we have begun to offer bespoke business management packages. For example, we are able to quantify the impact of financial change, speak to banks about capital and identify what the future impact will be on their business so that we can be proactive whilst planning for the next 12-24 months.
For more information about our management packages, please get in touch.