Capital gains tax/rollover

[Beekeeper1]

Good evening all - I hope that I am not being too cheeky, but am after some impartial generic advice from an experienced tax advisor ( realise, of course, that I do need a full consultation in person too, but a few pointers would be helpful!)

In brief, I own a block of woodland which has increased in value approximately 5 fold since I bought it 26 years ago.

I also own a property in another part of the country, no mortgage, my principal residence. The adjoing farm ( County Council owned) is to be sold off in lots ( whole other issue here, as yet another dairy farm goes to the wall. Sad day.)

However, I have been offered the opportunity to make an offer for the field which adjoins my garden - an offer I would really like to take advantage of so that I can have the large wildlife pond, orchard, wild flower meadow and space for more beehives which I have always dreamed of.

Short of obtaining a mortgage for the field, the only way I can think of progressing this is to sell my woodland to fund the purchase of the field ( each is roughly the same value as the other).

My question is: would I be liable for Capital Gains Tax on the sale of the woodland - it is not a business asset, nor have I ever sold any produce or derived any income from it - it has always been exclusively an amenity where I enjoy spending time, planting trees, clearing glades, encouraging wild flowers, butterflies and birds, as well as providing firewood for my home.

The field I wish to buy is subject to an 'agricultural use' restriction. Is it possible to 'rollover' any CGT from the sale of the woodland to the purchase of the field and would purchase of the field be subject to Land Tax Stamp Duty? The purchase price would be sub 100k.

For context:

I am 55, male, unmarried, but with a partner and 13 year old stepdaughter, employed full time and basic rate taxpayer.

Thank you so much for wading your way through this and any advice or thoughts would be sincerely appreciated.

unfortunately for CGT purposes you couldn’t roll this over. Well off the top of my head I can’t think of a way. How much profit are you liable to make? I’d also be aware that if you sold on the field adjacent that you’re about to purchase any gain would likely be liable for CGT as wouldn’t be garden or grounds within the context of Private residence relief- the fact you’ve added it to the property would mean it’s not required for enjoyment of that property.

Thank you so much for your response - gross profit on the sale of the woodland would be approx 60k - less 6% commission to the specialised land agents who would handle the sale. That, and CGT would virtually wipe out any profit over and above what I paid all those years ago! Can't help thinking that my best option would be to keep the woodland, sell some of the timber, buy the field with a mortgage and rent it out or sell the grass keep to a grazier and find some way of putting it all into a trust for my nearest and dearest. How complicated it all is!!

You know you only pay CGT on the profit right? So you’d be paying 18% (as a basic rate tax payer) on the profit after your personal allowance. So very roughly, assume you bought for £15k and it’s now worth £75k, you’d take off £11k PA and pay 18% of £64k, which is £11520. Even with a 6% agency fee to pay (£4500), you’d still pocket just under £59k meaning you got a profit of £44k for owning that land.

Part of the gain on the woodland will get taxed at 10% and part at 20% because the gain will sit over the basic and higher tax bands. If you wanted to keep the woodland and get it into a trust the gain can be rolled over. It will take some time to sell the woodland and in the meantime the council land will be sold quickly. Your biggest issue will be getting consent to do what you want with the new land which you say is take it out of farming use. It will have some development potential either way.

Woodland is usually exempt from CGT. See here.

The OPs woodland doesn't fit into that category.

How do you know @AI203? Have you visited them? If there is a possibility that it can be proved it has scientific, scenic or historic value then it’s an avenue that is worth exploring.

You are correct about the expected timescales of sale of woodland and purchase of farmland and the need to comply with agricultural use regulations. Although I think with a bit of understanding of the rules the OPs plans could be adapted to fit in with these.

The route to go down is to put the woods into a trust and buy the land with a mortgage if OP wants both. It isn’t a CE asset based on OPs given facts. Otherwise making it over complicated will not work.

Thank you all for your responses and input - very much appreciated.
The woodland does not currently have any significant status, although it is in a designated area of outstanding natural beauty and does support a small colony of Common (!) Hazel Dormice and part of my amateur management works have been specifically to enhance the habitat for this species.
My instinct, currently, is to NOT sell the woodland, but to commission a management plan, establish a small business and sell some of the standing timber, with the knowledge that the return would be nominal, but may satisfy the criteria required for it to be regarded as commercial, as opposed to amenity. My stepdaughter wishes to study for a PhD at some point in the future and I am anxious to be in a position to assist her with funding, through university, either from generated income from the woodland, or by leaving her the asset itself ( should I snuff it) which I understand falls outside inheritance tax liability.

In the meantime, purchase of the field will probably remain a pipe dream unless I can find an alternative source of funding - I agree with the pp who suggested that selling the woodland would take considerably longer to achieve than the timescale available to purchase the field - doubtless there are other people locally in a position to move quickly on this.

Once again, thank you to all for your thoughts and comments