[Diggers350] 'Agricultural' tax scam

Kestrel Kestrel neil_axe at hotmail.com
Fri Nov 26 11:17:40 GMT 2010

A number of misunderstandings in the article below - so please don't all rush out to buy pony paddocks in order to escape taxes!:
1. For land to be classed as agricultural land including pasture and thus exempt from capital gains, it has to satisfy a number of other criteria other than just smelling of manure and/or having growing things or animals. It needs to be either a legitimate farm already clearly established, recognised (by the Revenue) and in use as such; or at least 8km from any settlement having or deemed to have a population of 10,000 people, and also it needs to be used for agricultural purposes - which may well include lying fallow or being set aside in an approved scheme. However I think it would be very hard for someone to argue that their paddock was agricultural land with no crops and just one animal - and that sole animal never did any farm work, and indeed there was no farm beyond the paddock for it to work on.
2. Capital gains tax is only paid on sales that make indexed profits (which means the amount you spent out in costs in the past is increased to reflect what it would be now allowing for inflation) and even then individuals get an annual capital gains excemption of about £10,000 a year, which is completely seperate and in addition to the normal allowances for income tax. In reality this means it would have to be a very expensive and very profitable 1 acre land sale in order to have to pay capital gains regardless of whether its exempt or not - assuming you didnt sell other assets in the same tax year. 
3. Land ownership does NOT entitle you to CAP benefits. The vast majority of land owners in this country receive no CAP benefits and are not entitled to any. To get CAP payments you first of all have to clearly show that you have agricultural land and that you are using it for recognised agricultural purposes. Your paddock would have a hard time demonstrating this for the same reasons as I set out in point 1 above.
4. In death most assets are not liable to capital gains tax.....and in a way all taxes are somewhat irrelevant to you - because you are dead. In death if you have a large estate your beneficiaries may be liable for inheritance tax not capital gains tax, but even then there are all sorts of reliefs, exemptions and allowances - which frankly means that you would have to have had some bad tax planning and a lotta pony paddocks before your estate had to pay out any significant taxes. To be clear though, merely owning a pony paddock - even if you did somehow get it deemed as agricultural land, would in no way entitle you automatically to capital gains exemption on the sale of other assets - regardless of whether you were dead or alive.
Kestrel ^!^ X


To: democracyvillage at googlegroups.com; ; project2012 at googlegroups.com
From: james36armstrong at hotmail.com
Date: Sat, 20 Nov 2010 09:55:11 +0000
Subject: [Diggers350] 'Agricultural' tax scam

If you want to avoid capital gains tax, be a farmer.
But if your not a multi millionaire, just buy a pony paddock.
There are an estimated  900,000 horses in UK.  (They don't pull ploughs exept at the annual  Dorset Fair)
At the ratio of one acre to one pony that works out at 900,000 acres of 'pony paddocks'in UK. Pasture (and farmland and land set aside from farming for wildlife) is exempt from capital gains tax.
In life,landownership qualifies you to pocket CAP benefits- the more land the bigger the benefit. In death the same land qualifies you for exemption  from Capital Gains Tax. 

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