We are redeveloping our property and have planning permission to demolish the existing bungalow and replace it with two detached houses. We have to build both houses ourselves because there are complications with the site and we wish to avoid a prolonged construction period. What tax will be charged when we sell one of the new houses?
Arthur Weller replies:
I presume that you intend to sell this new house when you complete it, or soon afterwards. If so, this is a ‘trading transaction’. You are acting as property developers, so when you sell the house you have built, you will be subject to income tax on the profit you make, and Class 4 National insurance contributions may be payable as well. The construction industry scheme rules also need to be considered.