I have a large garden and my neighbour has agreed to sell me the adjacent 0.1 acre of their garden. This will become part of our garden amenity, for our enjoyment rather than any intention to develop. Nevertheless, the extra land is large enough to fit a house, and when combined with my existing garden, there is space for three detached houses (the combined area, including my house is 1,800m2 / 0.44 acre / 0.18 hectare).
After a period of time, I may consider building myself a new house to become my Principal Private Residence (PPR) and sell my existing house. Planning permission has not been applied for, although it is likely to be permitted. When the time is right, I may also like to assist my two children so that they can each have a plot for their own self build. I am looking for general advice on the best way to arrange our affairs to minimise any tax liability.
Presumably the extra land will, once acquired, become part of my domestic curtilage, but does a period of time need to lapse before it is considered as part of my Principal Private Residence?
If we then transfer (gift or sell) some of the land to each child (or they could purchase in joint names to acquire a larger double plot), am I correct in thinking I can sell part of my garden as long as it has not been ‘fenced off’ and therefore no tax is due because it is considered as part of my PPR? Ideally selling both at the same time. However, there may be other tax issues here. I guess it would be sensible to get a valuation at the point of transfer in case there are future inheritance tax issues!
Is it best to sell or gift land to the children? (Broadly aware of seven-year rule and inheritance tax is a potential issue and this might indicate gifting could be a sensible option).
Thinking further ahead, I expect the next step is to apply for planning permission – probably under three separate names for three separate houses. Have I broadly got the appropriate steps and in the right sequence, or should I consider alternative solutions? Such as getting one of my children to acquire my neighbour’s land direct?
Is there any reason to transfer the two individual plots prior to securing planning permission, or is it better to do so after permission is granted?
Are there any Capital Gains tax issues to consider? Especially if the transfer of land was before planning permission and the children wanted to sell it on once planning consent was obtained? (As a plot with permission would be more valuable).
Should the project be seen a separate self builds, or combined (if possible) as a small community build?
If we proceeded with building work as separate self builds and one or both of the children decided to sell their finished property, is there a risk of being seen as a developer if they sell too soon? Presumably they will need to live in the new home as their PPR for a period of time?
Are there any issues around council community infrastructure levy (CIL) charges and if exemption can be applied for?