The relaxation of planning rules and the need for more housing generally provides increasing opportunities for families to sell land for property development. Profits realised can be very substantial but, without careful tax planning, a significant proportion can be swallowed up in tax.
It is generally preferable for any gain on the sale of land to be subject to capital gains tax (“CGT”) as opposed to income tax. This is because CGT is now charged at a top rate of 20% (other than for gains on residential property itself, which are taxed at 28%). In comparison, income tax is charged at a top rate of 45%.
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