Are there any tax implications if I gift land to my son?

23 February 2016

I own a small field worth around £25,000. Am I able to give the land to my son? Would there be any tax implications?

FF/West Hythe

"A gift of land or property is liable for capital gains tax just the same as if you had sold it.The base cost of the land will be deducted from the market value to assess the capital gain.

Provided the field was used in your business or was used for agricultural purposes, then you can make a joint claim along with your son for the gain to be deferred until he sells the property. Your son will need to include its cost when he works out the gain on the land when he sells it later.

Only if the amount of the gain is more than £11,000 must you report the gain to HMRC, by completing a self- assessment tax return by 31 January following the end of the tax year in which the transfer took place. In any event, you will need a professional valuation to be able to substantiate your claim as to its value as you may be challenged by HMRC.

The sale of the land is also subject to stamp duty land tax. Assuming the land is freehold, no stamp duty land tax arises as it is below the nil rate currently at £150,000. In any event, you will need to register the transfer at the Land Registry.

Gifts from one person to another are considered potentially exempt transfers, which means you don’t pay inheritance tax (IHT) when you make the gift, but your beneficiaries might have to when you die. If you survive more than seven years after the gift, then no IHT will be payable.

If you die before seven years have elapsed, then your estate will be subject to inheritance tax on a sliding scale at up to a maximum of 40% before any reliefs.

Agricultural property can benefit from relief from IHT provided it is land or pasture that is used to grow crops or to rear animals intensively.

The property must have been owned and occupied for agricultural purposes for at least two years by you for relief at up to 100% to apply."

David-Weslet-Yates is a chartered adviser at Red & Black Accountancy.


In reply to by anonymous_stub (not verified)

I was given a barn in 2007 but the solicitor didn’t register it in my name until 2010 my mother who gave me the barn passed away in 2018.i converted the barn and lived in it from 2010 if she had died in the seven year gift period would I have had to pay inheritance tax.

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