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HMRC internal manual

Capital Gains Manual

Private residence relief: garden and grounds: definitions

Whether you can regard a particular piece of land as garden or grounds of a residence is a question which must be decided on the facts. The phrase ‘garden or grounds’ is not defined in the statute and neither has its meaning been considered in case law. Therefore the words must take their everyday meaning.

A useful dictionary definition of the word garden is,

‘a piece of ground, usually partly grassed and adjoining a private house, used for growing flowers, fruit or vegetables, and as a place of recreation.’

The word ‘grounds’ infers a larger area than ‘garden’. A useful dictionary definition of the word grounds is,

‘Enclosed land surrounding or attached to a dwelling house or other building serving chiefly for ornament or recreation.’

Generally speaking you should accept that land surrounding a residence which is in the same ownership, is the grounds of the residence, unless it is in use for some other purpose.

Land which at the date of disposal is in use for some other purpose for example agricultural land, commercial woodlands, land under development or land in use for a trade or business should not be regarded as part of the garden or grounds.

The following land should not be excluded from the garden and grounds,

  • Land which has traditionally been the garden and grounds of the residence but at the date of sale is unused or overgrown.
  • Paddocks or orchards providing there is no significant business use.
  • Land which has a building on it, see CG64200, unless that building is in use for a business or is let.

Where the land in question was acquired on a different date to the residence, it should also be accepted as garden or grounds providing it was subsequently brought into use as the garden or grounds of the residence and remains as garden or grounds at the date of disposal.

Mixed Use

To qualify for relief land does not have to be exclusively in use for recreational purposes. For example, the owner of a guest house may allow guests to use the garden. In these circumstances the garden will still qualify for relief if the other tests are satisfied.