NFU Mutual Smallholding Insurance

Author Topic: Tax liability, converting a barn to residential units  (Read 1869 times)


  • Joined May 2014
Tax liability, converting a barn to residential units
« on: May 30, 2014, 02:55:31 pm »
Under the new planning laws there is permitted development to convert the barn of 250 m2 into three residential dwellings( MB to C3)
We have a five acre smallholding and we are thinking of converting the barn into one 4 bedroomed semi and two 2 bedroomed apartments.
I am not sure what the tax liability would be on the new development, or if it would be better financially to sell our existing detached bungalow and to move into the semi and rent out the apartments. or if it would be better to sell the barn with planning permission for the proposed development and to retain our existing house. We can not financially develop the barn and retain the existing house .
I would be grateful for some advice please.
Voss Electric Fence


  • Joined Oct 2011
Re: Tax liability, converting a barn to residential units
« Reply #1 on: May 30, 2014, 11:43:42 pm »
Funny you should ask this we are thinking of doing the same and I am going to get some advice from a land agent and a accountant. I did wonder if you could create a property company if you could put all the money made from sale or lets in a self invested pension then you would each be able to claim tax relief on any profits. You should be able to claim a reasonable amount for labour charges involved in the running of the company. you are not allowed to directly invest pensions in residential property you have to sell when you get a certificate of habitation when you do a new build.


  • Joined Oct 2011
Re: Tax liability, converting a barn to residential units
« Reply #2 on: May 31, 2014, 09:52:46 am »

'Through your Self-Invested Fund you can enter into transactions directly or indirectly with
yourself, your business, your partners, your family or any person ‘connected’ with you. You
have to undertake such transactions on an open market valuation basis. This type of transaction
is likely to appeal particularly to professional practices and small businesses, which own the
commercial premises that they occupy'

 I am still thinking this all through. The new rules on development allow 450msq to be developed for housing and there is another aspect about 500msq developing for A1 use. So if you remove the residential part and develop letting rooms and perhaps  office,cafe, farm shop which are owned/managed by the property company.

Marches Farmer

  • Joined Dec 2012
  • Herefordshire
Re: Tax liability, converting a barn to residential units
« Reply #3 on: May 31, 2014, 10:39:04 am »
On a purely practical note, I once spoke to a very experienced local agricultural estate agent who said he'd never met a farmer who'd developed outbuildings to residential use who hadn't bitterly regretted it a few years later, mainly because you can't control who buys it and you can find yourself sharing space with some very unpleasant people.  We converted a stone barn which was already a shop/tearoom when we arrived here, but only to holiday cottage use.  Most guests are OK, some really nice and others we can't wait to see the back of (a bit like life, really!)  We always give a big sigh of relief at the beginning of the January/February closed season.  At least they only stay for a week at a time.

john and helen

  • Joined Mar 2013
  • Devon
    • Facebook
Re: Tax liability, converting a barn to residential units
« Reply #4 on: May 31, 2014, 02:32:20 pm »
Even though its  PD, i believe on this one, the council can still veto… this has been a subject on another forum, it don't seem to be as straight forward as normal agriculture buildings


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