CG65124 | Private residence relief: example: disposal of garden/grounds within permitted area: separate asset

F acquired a house with a 0.8 hectare garden in June 2012 for £200,000. It has been used as her residence throughout her period of ownership but was only her main residence from June 2012 to August 2015. In October 2020 she sold a piece of land of 0.2 hectares for £80,000 and submitted a computation of the gain on the separate asset basis. The Valuation Office has agreed that all of the land sold falls within the permitted area and has apportioned £20,000 of the cost to that land.

The gain is computed as follows:-

Private residence relief

• Period of ownership is June 2012 - October 2020 = 101 months

• Period of only or main residence is June 2012 - August 2015 = 39 months

• Final period allowed by s223(2) TCGA92 = 9 months

The relief is 39 + 9 / 101 x £60,000 = £28,515

The chargeable gain will be £31,485 (£60,000 - £28,515) before the annual exempt amount.

If the dwelling-house had always been her only or main residence the gain would have been wholly relieved, and a computation would only be needed to establish how much of the cost of the property should be apportioned to this disposal.

If the land lay wholly outside the permitted area the whole of the net gain of £60,000 would be a chargeable gain, regardless of the use made of the dwelling-house.