MPs call for change to ‘unfair’ tax laws which hit homeowners affected by HS2
David Lidington, MP for Aylesbury, Cheryl Gillan, MP for Chesham and Amersham and Dominic Grieve MP for Beaconsfield are among the signatories to the Country Land and Business Association’s (CLA’S) letter to the government.
The CLA, which represents landowners, farmers and rural businesses, approached several MPs asking for support for its tax reforms to make the compulsory purchase system fairer.
Under existing Capital Gains Tax (CGT) rules if a landowner uses the money received from land that has been compulsorily purchased to buy other land they are entitled to relief.
However if they choose to use the money to pay for replacement building on land they already own they have to pay CGT before making necessary reinvestment.
For example, the Prideaux family’s farmland near Quainton includes a lodge, currently let to a tenant, which would be demolished to make way for HS2. It would be impossible to rebuild the property on existing land without paying a huge bill for Capital Gains Tax.
CLA director South East Robin Edwards said: “Families affected by compulsory purchase in Buckinghamshire face major worry and uncertainty often over a number of years.
“The whole system is in urgent need of reform. A good first step would be to allow people flexibility to invest in replacement property without fear of being hit with a large tax bill.
“We also want to see an extension to this so landowners affected are eligible for the relief for longer and so have a realistic timeframe to plan a sustainable replacement for the land or property lost to compulsory purchase.”
Mrs Gillan said: “I, and several of my colleagues fully support the CLA’s reforms to Capital Gains Tax relief. As an MP for a constituency badly affected by HS2, I have seen the trauma experienced by those whose livelihoods are put at risk. All they want is to find a way to continue running their business in a viable way but the current tax rules stop them from doing this.”
Other MPs to have signed the letter include the Attorney General Jeremy Wright QC MP and Caroline Spelman MP, former Secretary of State for Defra and MP for Meriden.
Chancellor George Osborne announced in the Autumn Statement last week that the Government would publish proposals to make the compulsory purchase system fairer in the 2015 Budget. The CLA said it will continue to press the Government for reform of Capital Gains Tax relief to be included in these proposals.