CG65126 | Private residence relief: example: disposal partly within permitted area: separate asset
From HM Revenue & Customs · Capital Gains Manual
H acquired a house with two hectares of garden in June 2010 for £150,000. It was used as her residence throughout her period of ownership and was her main residence from June 2010 to January 2017. In May 2020 she sold a piece of land of one hectare for £100,000 and submitted a computation of the gain on the separate asset basis.
The Valuation Office agreed that 0.2 hectares of the land sold is within the permitted area.
The apportionments should be:
| Description | 2010 (£) | 2020 (£) |
|---|---|---|
| 0.2 hectares within permitted area | 4,000 | 20,000 |
| remainder | 16,000 | 80,000 |
| - | 20,000 | 100,000 |
The gain is computed as follows:
| Minus | Description | 0.2 hectares (£) | Remainder (£) |
|---|---|---|---|
| - | Disposal proceeds | 20,000 | 80,000 |
| Less | Cost | 4,000 | 16,000 |
| - | Gain | 16,000 | 64,000 |
The gain arising on the 0.8 hectares outside the permitted area is wholly chargeable, but some relief is due on the 0.2 hectares within the permitted area.
Private Residence Relief
Period of ownership is June 2010 to May 2020 = 120 months
Period of only or main residence is June 2010 - January 2017 = 80 months
Final period allowed by s223(2) TCGA92 = 9 months
The relief is 80 + 9 / 120 x £16,000 = £11,867
The chargeable gain will be £4,133 + £64,000 = £68,133 before the annual exempt amount.
If the dwelling-house had always been her only or main residence the gain on the 0.2 hectares of land within the permitted area would have been wholly relieved and a computation in respect of that land would only have been needed to establish how much of the cost of the property should be apportioned to this disposal.