Case Study – Richard

Richard and his wife owned a pub which had some land at the rear that was used as a Caravan Park. He wanted to apply for planning permission to develop this field for residential dwellings but was concerned about the amount of Capital Gains Tax that they would be liable for if he did this.

The first step was to separate the field from the pub with the Land Registry and as he had some pensions we transferred these into a SIPP (Self Invested Personal Pensions). He then used some of these funds (£25,000) to purchase the field through his Pension (which is allowable).

Then after obtaining planning permission for change of use, he sold this land onto a developer for £175,000. After all the charges he made £140,000 profit – TAX FREE as Capital Gains Tax is not paid by Pensions.

This meant that when he took his pension benefits, he could take 25% (£35,000) Tax Free and had further funds to provide him with an income once he retired.

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