Where landowners work together to promote their land for development, they usually want to equalise any profits. This is so that each landowner can receive a fair return from co-operating, regardless of which particular piece of land is sold when and for how much.

From a tax point of view, it is now clear that the best vehicle for equalisation is the "pooling trust".

While the pooling trust is based on a 1989 CGT case, it has only recently become clear how effective it is for other tax purposes. The structure can be put in place and, when it has served its purpose, be dissolved:

  • Without CGT
  • Without SDLT
  • Without triggering the anti-avoidance provisions on land development gains which can turn a 10% or 28% CGT bill into 50% income tax.

At the centre is a carefully drafted agreement, based on current market values. This allows each landowner to set against his proportion of any sale proceeds received, an appropriate fraction of his historic CGT base cost.

The landowner's transfer into the pooling trust does not trigger either CGT or SDLT.

Any land not disposed of can, in due course, be withdrawn from the pooling trust and returned to the original landowner. Once again there is no CGT disposal and no SDLT to pay.

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