PROPOSED capital gains tax (CGT) changes could have a 'significant impact' on the sale of farms and farmland, according to rural property experts.

The CGT allowances are currently set at £12,300, which means no tax is paid on the first £12,300 of gain made on the disposal of an asset. The Chancellor, Jeremy Hunt, had already indicated that this would be reduced to £6000 in April, 2023, and further reduced to £3000, in April 2024.

Rural property consultancy, GSC Grays, has warned that the proposed changes could have a major impact on farm sales. “It is a fair assumption that the Treasury will be going after additional revenue through increasing CGT," said John Coleman, head of farm agency.

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He said these changes may inadvertently impact the price achieved for farmland if rollover rules were not similarly amended. This would give a buyer, with funds to rollover, significantly greater buying power if the prime motivation was to reduce their tax bill.

Ahead of potential changes, farmers have been urged to start preparing for higher rates of CGT. To achieve optimum sale prices, GSC Grays said farms were typically best marketed in the late spring or summer when the land was most accessible and 'everything looks at its best'.

Assuming an open market sale, the process from engaging an agent, marketing the property, agreeing a sale and completing the legal contracts, could take 'six to nine months'. Mr Coleman added: “For those that want to make the most of the current favourable rates, our advice is to start preparing now before higher rates of CGT significantly impact returns from any disposal.

“Currently, funds raised from the sale of a business asset can be rolled over into the purchase of another business asset, deferring a CGT payment until the next sale. This will potentially give those who have money to rollover 50% more buying power than a bidder without rollover and could significantly distort the market."