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Presentation to CAAV Tutorial at Reaseheath College, Cheshire, on 5 July 2012: 2012 Rural Tax and Valuation Update
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CAAV West MidlandsTaxation Update
Reaseheath College
Charles Cowap
5 July 2012
http://www.slideshare.net/cdcowap
Today:
Budget 2012
Valuation ….
http://www.hmrc.gov.uk/budget2012/ootlar-main.pdf
2012-13– Personal Allowance to become £8,105– Higher Rate Threshold to become £34,370
Lower Rate applies where >10% of estate given to charity
Bulk Purchase Rules Price averaged
Min 1% rateResidential Property
Broadly suitable for use as a dwelling Non-residential
includes mixed use and > 6 dwellings
http://www.hmrc.gov.uk/sdlt/intro/rates-thresholds.htm#2
Non Natural Persons, SDLT and residential property > £2 million
‘Non natural persons’: 15% rate for res
property > £2 million
Business Travel
• Approved Mileage Rate up to 45p/mile from April 2011 (was 40p)
• First 10,000 miles• No change above 10,000, stays at 25p
• Employer pays less than 45p?– Claim Mileage Allowance Relief on shortfall
CLAIM THE DIFFERENCE
Capital Allowances
Effects• Severe reduction of Annual Investment
Allowance (down to £25,000 from £100,000) wef 2012
• WDA also down by 2% wef 2012
• But Good News:
• Extension of Short Life Asset treatment from 4 to 8 years
Short Life Asset
• Previously restricted to 4 yrs, now 8 yrs• Treatment
– Treated separately from ‘pool’– Ordinary claims at 18% pa during ownership– Sell for LESS than balance claim difference– Sell for MORE than balance pay balancing
charge
• After 4 yrs/8 yrs, if not sold then transferred to general pool of P&M
• £100,000 machine
• Balance after 4 yrs @ 18% pa = £45,212
• Balance after 8 yrs @ 18% pa = £20,441
• So sell Yr 4 for £30,000, claim £15,212 balancing allowance
• New approach extends availability to 8 yrs
See: http://bit.ly/lQ6K9n for more
Furnished Holiday Lettings
• What was good for tax:– Claim Capital Allowances– Claim Loss Relief– Rollover Relief from CGT– Holdover Relief from CGT– Entrepreneurs’ Relief from CGT– Pension relief– Business Asset for IHT
• Looked as if we were going to lose this ….
FHLs: the changes
Was
• UK• Commercial, view to profit• Longer lettings no more
than 155 days pa• No single let more than
31 days• Available for holiday
letting 140 days• Actually let 70 days
Will be
• UK and EEA• Same• ?
• Available for 210 days from April 2012
• 105 days from 4.12• Losses restricted to FHLsLosses restricted to FHLs
VAT
New VAT guidance on land and property
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_PROD1_023492&propertyType=document
VAT on Listed Building Alterations
• Proposed to be Standard Rate VAT wef 1 October 2012
Business Rates
Farmhouses …• Rachel Dixon and her Westmorland
Damsons
• The Rosser’s retirement home
• Mr Higginson’s Irish shooting lodge
• Rosemary Antrobus Cookhill Priority (I & II)
• Sir Reginald McKenna, Rosteague House
• Mr Farmer and his diversified farm
• Ragley Hall’s business
• Mrs McKenna’s Conacre Field
• Brander (or Balfour), a Scottish business
• Mr Atkinson’s partners in Lancashire
• Mr Golding’s very small smallholding
http://bit.ly/n0Gdjq
• Hanson v HMRC [2012] UKFTT 95 (TC)
• Pawson v HMRC [2012] UKFTT 51 (TC)
Implications for Professional Practice and Instructions?
• Market Valuation: s160, Red Book
• Define Agricultural Property: s115– Land to which buildings and woods are
ancillary– Tenure considerations
• Define farmhouses, cottages, farm buildings (s115)
Advise on ‘character appropriate’ (s115)
• Size, content and layout considering AREA of land
• Size, content and layout considering FARMING ACTIVITIES
• Elephant Test?!• House with land, or a farm?• History• NB Retirement Homes!
• Opinion/evidence on satisfaction of occupation requirements: 2 years/7 years before death (s117)
• Full Valuation Report: Valuation and Report for Inheritance Tax Purposes (but NOT a probate valuation)
Red Book
• Definition of Market Value
‘Fair Value’
Other Recent Guidance
Value this farm for IHT
• 5 bedroom farmhouse• 3 cottages, 2 occupied by farmworkers, 1 let
on AST• 200 ha: 50 ha Grade 2, 140 ha Grade 3, 4 ha
yards and waste, 6 ha Grade 4• 200 dairy cows, followers, 80 ha arable• Ice cream business: 500 000 l pa @ £1/l• 5 000 sq m of ‘modern’ farm buildings• 500 sq m office conversion, fully let• 500 sq m with pp for holiday conversion
Contact Details
In-house CPD programmes, professional-technical updates, organisational consultancy, and more:
07947 706505
Twitter: @charlescowap
Blog: http://charlescowap.wordpress.com/
http://www.slideshare.net/cdcowap
Conclusions and Discussion