By Robert Black, Bsc (Hons) FCCA, CTA, Landed Estates and Agricultural Specialist.
With the recent announcement that the northern leg of HS2 will be scrapped, many of those already impacted by the scheme are left with great uncertainty. With the announcement of ‘Network North’, many more will be impacted in the future.
It is unclear whether completion for those already packed and awaiting conclusion of land sales to HS2 will go ahead, although many will wish to continue where these are blight cases. Some may even wish to buy back their original holdings under the Crichel Down Rules where surplus land is offered back to former owners, their successors and sitting tenants.
The taxation of compensation for compulsory purchased land is a complex area as it can be chargeable to capital gains tax and, in addition, chargeable to income tax where compensation is received for loss of income.
Luckily, there are reliefs available to the taxpayer. Business Asset Rollover Relief is available under the usual rules for assets used in a trading business. However, where land has not been used as a trade but has been sold under a CPO or to a body holding CPO powers, there are statutory rules for which relief may be claimed where further ‘new land’ is acquired.
The rules are similar in many ways to that of the normal Rollover Relief, however, reinvestment in ‘new land’ can include assets such as a dwelling house as long it does not become the residence of the taxpayer within six years.
It is important to note that a landowner has three years after the date of date of disposal to acquire qualifying assets. It is also possible to rollover the gain against qualifying assets purchased within the 12-month period prior to the date of disposal.
If you have been impacted by a CPO scheme, please get in touch to ensure you are not missing out on valuable tax reliefs.
