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HMRC internal manual

Capital Gains Manual

Private residence relief: permitted area: area automatically relieved

TCGA92/S222 (1) (b) sets out that relief is available in respect of land which is garden and grounds occupied and enjoyed with the residence up to the permitted area.

TCGA92/S222 (2) defines the permitted area as 0.5 hectares.

So where the area of garden and grounds, inclusive of the site of the dwelling house, does not exceed 0.5 hectares, relief is automatically available for the whole area.

This will be the case whether the land was disposed of with the dwelling house, or whether it was disposed of separately before the disposal of the dwelling house; as long as it was garden or grounds at the date of disposal. Land disposed of separately after the disposal of the dwelling house will not qualify for relief in line with the decision in Varty v Lynes, see CG64377 - CG64381.

There is no automatic entitlement to relief on the full area of land outlined above if that land is not the garden and grounds of the residence at the date of disposal. For example, if a person has a house and 2 hectares of land but of that land only 0.2 hectares are gardens and grounds with the remainder being used for the purposes of a trade, relief only extends to the dwelling house and 0.2 hectares.