CG64807 | Private residence relief: permitted area: identifying risks

Where a taxpayer has garden and grounds in excess of the permitted area and they dispose of all or part it, they should enter the details of the disposal on their tax return and provide further details of why they consider all or part of the gain is relieved from Capital Gains Tax.

However, where a taxpayer has relied on their own opinion that full relief is due, they may fail to mention this in a return. Other information, such as a large sale price, may therefore assist in identifying disposals of residences where part of the gain may not qualify for private residence relief.

Without the benefit of planning permission, garden land may be of little value. Where a dwelling-house and its garden and grounds are disposed of, and the garden and grounds only marginally exceed 0.5 hectares, it may be that the gain accruing on the land outside the permitted area will be small and may not be worth pursuit.

Initially when considering a case only limited information may be held. For example you might not have established what was the dwelling-house, the size and location of the permitted area may not yet be determinable and what other land was disposed of may be unclear. Similarly what was the value of each of these parts. It may be that the Valuation Office (VO) could provide early informal valuations or exceptionally hold further information. CG64860 gives guidance on submissions to the VO and the information they will need. If a case is potentially significant and an early submission is to be made it should state what information is not currently held and set out clearly the points you are seeking VO comment on.