I own a £45,000 share of a field: Can I give it to my son without incurring tax?

I own a one-quarter share in a field of 10 acres.

It cost me £5,000 when I bought it 32 years ago, and it is now worth approximately £45,000.

There is a clause in the agreement that if one partner wants to sell the land, they have to first offer it to the other partners for the purchase price.

I am 77 and can no longer look after the land. I want to give my son my share, but I have been told I have to pay tax on the difference between the purchase price and what it is worth today.

Is this correct, is there any way to avoid or mitigate this? G.A

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Harvey Dorset, of this is Money, replies: This sounds like it was a wise investment, having delivered a hefty return over the past three decades.

According to the Bank of England's inflation calculator, the £5,000 you spent on your share of the field back in 1993 would now be worth just over £10,000, whereas your share of the field is worth more than four times this.

Of course, with such an increase in value will also come a fairly hefty capital gains tax bill.

In the Autumn Budget, the Chancellor increased the rate of capital gains tax for investments and assets.

This means that CGT is now chargeable at 18 per cent for basic rate tax payers and 24 per cent for higher rate tax payers.

This is Money spoke to two financial advisers to find out how much you can expect to pay in tax, and what you can do to mitigate your bill.

Jonathan Halberda, Chartered financial planner at Wesleyan Financial Services, replies: If you gift your share of the land to your son it will be subject to CGT, even if no money changes hands.

The gain is calculated on the difference between what you originally paid for the land, and the current market rate.

That means you would potentially be liable for CGT on £40,000.

There is an annual tax-free allowance of £3,000 for CGT for the year 2025-26, but anything above that is subject to tax — typically at 18 per cent or 24 per cent depending on your overall income level.

The clause in the agreement requiring a sale to other partners at the original purchase price won't impact HMRC's approach.

They will assess the CGT due based on the open market value, not the restricted sale price.

So even if you technically transfer the land for £5,000, the tax is still calculated on the full gain.

There are a number of options available to potentially mitigate or reduce the amount of tax that might be due, including:

Pass the land on through your estate

If you retain the land and pass it onto your son through your will, it may be exempt from CGT as the asset's value will be reset to market value for inheritance tax purposes.

In this case, this will reset the £40,000 gain accumulated over the last 32 years, and your son will only have to pay CGT if he sells the land for more than the new value.

Additionally, if your estate is valued at under £325,000, or £500,000 if you also leave your main home to your children or grandchildren, inheritance tax may not apply either.

Hold for Business Property Relief

If the land qualifies for Business Property Relief, for example if it's actively farmed, it may receive inheritance tax relief, potentially making it more tax-efficient to retain and gift through inheritance.

Gifting in stages

You could consider gifting portions of the land across multiple tax years to utilise the CGT annual exemption each time.

Use of a trust

A discretionary or bare trust could be an option to help control the asset transfer and potentially spread CGT liabilities. However, this is a complex area so professional advice would be needed.

There's no cookie cutter right or wrong way to approach this. The best choice will be dependent on your personal circumstances.

Before deciding how to progress you should:

• If you haven't already done so, get a formal valuation of your share to confirm the market value. This will ensure you're making decisions based on the most up to date facts.

• Consult a tax adviser to get professional guidance on the best way to mitigate CGT based on your overall circumstances.

• Take a holistic look at your estate planning, as passing on the land could be the most tax-efficient option - although it's important to consider the impact this might have on your wider estate's value.

Sean McCann, chartered financial planner at NFU Mutual, replies: By gifting your share of the land to your son you may trigger a CGT bill.

Although you won't have received any money, HMRC would deem you have made a 'disposal' and seek to tax you on the difference between the current market value of your share of the land, and the sum you paid for it.

You may be able to deduct legal fees you incurred when purchasing the property, as well as any expenditure you've made to enhance the value of the land.

If you've sold other assets or investments in the current or previous tax years, and made a loss, you may be able to use this to reduce the taxable gain.

You can also make use of your annual exemption, meaning that the first £3,000 of any taxable gain would be tax-free.

The rates of capital gains tax were increased in the Autumn Budget. The taxable gain is added to your income, any part that falls in the basic rate is taxed at 18 per cent with any excess taxed at 24 per cent.

If the land is being used for agriculture, you may be able to take advantage of 'gift hold-over relief'. This would allow you to defer any capital gains tax on the gift to your son.

Should he choose to sell in the future, he would use your acquisition value of £5,000 when calculating any taxable gain. The rules can be complex, so it would be wise to take advice before taking any action.

The other tax you need to consider is inheritance tax. If you survive seven years after gifting the land to your son it would normally be free of inheritance tax. However if you die within seven years the value of the land at the time of the gift would be included in your Inheritance tax calculation.

If the land is being used for agriculture, it may be possible to claim agricultural property relief which may reduce or eliminate any inheritance tax due on the land. However, this will depend on what the land is being used for, and by who.

Before gifting your share of the land to your son, it's important to remember that if you were to retain ownership, any capital gain is wiped on your death.

This would mean that should your son sell after your death, he would only pay capital gains tax on any rise in value between your death and the sale.

If agricultural property relief was available on your death on the full value of the land, this would mean that your family could potentially escape inheritance tax on it as well.

As agricultural property relief is due to be capped from April 2026, it's important to take advice.

You should also take legal advice on the agreement you have in place with the other owners, as this may impact the market value of your share of the land.

You may also want to check how the land is owned, to establish whether on your death your share passes to the co-owners or whether you are free to leave in your will.