Rural Tax and Valuation Update 5 July 2012

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Presentation to CAAV Tutorial at Reaseheath College, Cheshire, on 5 July 2012: 2012 Rural Tax and Valuation Update

Presentation to CAAV Tutorial at Reaseheath College, Cheshire, on 5 July 2012: 2012 Rural Tax and Valuation Update

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  • The Purpose of a valuation is fundamentally important for the following reasons: To establish professional framework – eg Red Book or not Red Book requirement – state purpose of valuation Special provisions if client will not tell you purpose Important implications for instructions Basis and definition of value Eg Market Value has slight differences for tax purposes from general Red Book definition of Market Value. Extent and nature of inspection Reporting requirements Liability and conflicts of interest Basis on which Instructions will be confirmed and other preliminary requirements

Transcript

  • 1. CAAV West Midlands Taxation Update Reaseheath College Charles Cowap 5 July 2012http://www.slideshare.net/cdcowap
  • 2. Today:Budget 2012Valuation ….http://www.hmrc.gov.uk/budget2012/ootlar-main.pdf
  • 3. 2012-13 – Personal Allowance to become £8,105 – Higher Rate Threshold to become £34,370
  • 4. Lower Rate applies where >10% of estate given tocharity
  • 5. Bulk Purchase Rules Price averaged Residential Property Min 1% rate Broadly suitable for use Non-residential as a dwelling includes mixed use and > 6 dwellingshttp://www.hmrc.gov.uk/sdlt/intro/rates-thresholds.htm#2
  • 6. Non Natural Persons, SDLT andresidential property > £2 million ‘Non natural persons’: 15% rate for res property > £2 million
  • 7. 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
  • 8. Capital Allowances
  • 9. 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
  • 10. 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
  • 11. • £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 yrsSee: http://bit.ly/lQ6K9n for more
  • 12. 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 ….
  • 13. FHLs: the changesWas Will be• UK • UK and EEA• Commercial, view to profit • Same• Longer lettings no more • ? than 155 days pa• No single let more than 31 days• Available for holiday • Available for 210 days letting 140 days from April 2012• Actually let 70 days • 105 days from 4.12 • Losses restricted to FHLs
  • 14. VAT
  • 15. New VAT guidance on land and property http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebA pp.portal? _nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_PROD1_02 3492&propertyType=document
  • 16. VAT on Listed Building Alterations• Proposed to be Standard Rate VAT wef 1 October 2012
  • 17. Business Rates
  • 18. 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
  • 19. • 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)
  • 20. Implications for Professional Practice and Instructions?
  • 21. • 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)
  • 22. 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!
  • 23. • 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)
  • 24. Red Book• Definition of Market Value
  • 25. ‘Fair Value’
  • 26. Other Recent Guidance
  • 27. 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
  • 28. Contact DetailsIn-house CPD programmes, professional- technical updates, organisational consultancy, and more: cdcowap@gmail.com 07947 706505Twitter: @charlescowapBlog: http://charlescowap.wordpress.com/ http://www.slideshare.net/cdcowap
  • 29. Conclusions and Discussion