Any accountants that could advise on this?

[jollyjollyme]

I'm not well versed in UK tax matters and would like feedback on whether the scenario below has tax implications, particularly capital gains tax?
Mrs A owns a freehold terraced house purchased for £250K. Included in the deed when purchasing was an easement for Mrs A to walk through a section of her neighbour's (Mr B) land.
Mr B has requested that Mrs A release her easement rights in exchange for a payment of £8000 to Mrs A.

If Mrs A accepts £8000 in exchange for releasing the easement over Mr B's land, is this income taxable as capital gains (or on some other basis) for Mrs A?

Thanks in advance an apologies if this is a very basic question. I don't necessarily need guidance on calculation and am just in search of a confirmation that this sale would indeed entail tax obligations for Mrs A

Does Mrs A live in the house which has the benefit of the easement?

It certainly isn't a capital gain. The value of the house will reduce by a lot more than £8,000 due to the lack of this easement so Mrs A is making herself poorer not richer. It's not income either. It's selling something of great value for for an amount less than its worth. There's no tax due when private individuals make sales between eachother like this but Mrs A should take professional advice on the impact of this before agreeing - it could make her house extremely difficult to sell.

There is not enough info to be able to tell, she’d likely have to speak to a tax accountant to understand/prepare any submission. However, capital gains tax would not arise on the £8k if it is payable, it would only arise on the increase in value since she bought the property - so you may have to apply backwards indexation to the £8k to work out how much the rights would have been worth when she purchased the property - capital gains tax (if applicable, which is definitely unsure as it’s a right she’s selling and not actual property) would only arise on this difference.

the above response makes no sense whatsoever, from the info given there is no basis to conclude whether the right has any value whatsoever to the seller, much less that it will make her property worth less or worthless… could be and likely is random access that she never uses anyway if she wants to sell it.

I think @OpizpuHeuvHiyo may have , dependant on limited info we have, hit the nail on the head.

Access to the rear of terraced houses via alleys or breaks in the terrace is something you should have and it's absence is going to be a problem. Does Mrs A want, for example. to have to pull bins through her house or have workmen trail back and forth?

I would be reluctant in the extreme to have that and it may be a problem for mortgage lenders too.

So it's access to the garden but is rarely used.
As it is an end of terrance house (sorry should have mentioned this before) there is already access to the garden via another entrance that is used regularly.

My initial hunch (and don't read this as gospel, but more of a starting point) is that it is a part disposal of the house as you are giving up a right within your title.

See here: www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg12955

Although, if Mrs A lives in the house as her primary residence, I wonder if you are able to claim Private Residence Relief on any potential gain. While an easement is intangible, I can't immediately see why it would be treated differently to if a piece of a garden was sold off (although I will say there are provisions which could tax intangibles separately, but I've looked at that for other things such as IP which is a different asset).

I would hazard a guess it is taxable as a capital receipt, however, potentially no gain if PRR is applicable.

@jollyjollyme fair enough though I think I'd still want to run it past a competent conveyancer regarding implications on sale/mortgageability before signing up to the offer.

I do wish people wouldn’t comment in Legal if they don’t actually know the answer. It certainly is a capital gain, you’d have to do a part disposal calculation to work out whether there is tax payable or whether it is a loss. It’s a formulaic calculation so it’s not possible to figure it out based on assumptions, you need actual valuations and advice from a tax adviser. PPR relief might apply, there’s no way of knowing from the OP. Indexation allowance was abolished for individuals in 2008.

if you need tax advice please make sure that you consult a Chartered Tax Adviser to make sure that you’re speaking to someone who knows what they’re talking about. That said, the best advice on this thread it to not agree to release the easement, you’ll never get it back once it’s gone.