CGT on the sale of a barn

Trusts Discussion
1

I have a situation to consider and would appreciate any thoughts form the members.

Mum and Dad gave a house with some land and outbuildings in to their 4 sons equally. Since then one of the brothers has gifted their share over the years (utilizing their CGT allowance ). The shares are now 7%/ 31%/31%/31%

At the date of the gift the whole was valued at £24,000 in 1984

The value is mainly attributable to the house and the barn.

The house is now valued at £550,000 and the barn at £200,000. The value of the barn was £20,000 prior to planning permission being obtained. The purchasers will be using a mortgage for part.

The family wish to sell the barn to other family members for £200,000.

One of the brothers wishes to use his share of the sale proceeds and other monies to buy out the other two brothers (assuming that the 7% holder will disappear after selling the barn).

Any suggestions as to ways to minimize CGT would be welcome.

Many thanks

Collette

2

Hi Collette,

what are the brothers ‘buying out’? the house?
when you ask about mitigation, are you thinking of EIS investments to defer the CGT or reducing the CGT on the actual sale?
I would expect it to be a standard CGT calculation using the proceeds less cost - the decision will be how much of the £24k is relevant to the cost of the barn. You may consider an apportionment but I would propose pre-planning apportionments or see if the original valuation had any split given.

If the sale is going to family members (and I’m not sure how far along they are) might it be an option to split the disposal over two tax years, thus getting two CGT allowances.

This is obviously only a basic starting point at is the information is limited.

Lucy Orrow CTA TEP
Lambert Chapman LLP