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HMRC internal manual

Capital Gains Manual

Private residence relief: the entity of the dwelling house: application of the curtilage test

If a building is appurtenant to and within the curtilage of the main house, generally speaking it will form part of the entity of the dwelling house. However this may not be a straightforward matter, so consideration must be given to the facts of the case to decide whether it is necessary to apply the test.

For example, if a building is used exclusively for the purpose of a trade, it will not be eligible for private residence relief by virtue of TCGA92/S224 (1), see CG64660+. Therefore in such cases it is not necessary to consider the curtilage test. You may also come across other cases where a building within the curtilage of the main house does not have a residential purpose. Again, such a building will not form part of the entity of the dwelling house and it will not be necessary to apply the curtilage test.

Where a building has a residential purpose but is not appurtenant to and within the curtilage of the main house, it will still qualify for relief if it lies within the permitted area of the dwelling house. This is because buildings are legally part of the land on which they stand so if the building is within the permitted area it will also be covered by relief. So you should not raise enquiries in cases where the total garden and grounds do not exceed the permitted area unless you are aware that a building has been disposed of which was not part of the dwelling house and which did not have a residential purpose.

Where the area of garden and grounds exceed the permitted area and an ancillary building has been disposed of which was not part of the dwelling house, you should ask the Valuation Office Agency whether the building is within the permitted area of the dwelling house. See CG64800+.