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06 October 2020
Tax treatment of a gain on conditional sale of property.
We act on behalf of a sole trader client who has agreed to sell part of the land used in his business. He received a 10% non-refundable deposit in August 2020 amounting to £200 000 with the balance payable in 18 months’ time as long as the buyer obtains planning permission to develop the land. If this permission is not received the sale would not be completed. That said I assume that the buyer must be confident of obtaining permission in view of the amount of the deposit paid. The land cost £150 000 about 35 years ago so there is a substantial capital gain.
Our queries are as follows.
- The £200 000 would presumably be a gain in 2020-21. When would the balance be taxable in view of the contingent nature of the sale?
- If the gain on the whole proceeds is taxable in...
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