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HMRC internal manual

Capital Gains Manual

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 2002 for £200,000. It has been used as her residence throughout her period of ownership but was only her main residence from June 2002 to August 2005. In October 2010 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 Agency 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:-

  Disposal proceeds 80,000
Less Cost 20,000
  Gain 60,000

Private residence relief

  • Period of ownership June 2002 - Oct 2010 = 101 months
  • Period of only or main residence

June 2002 - August 2005 = 39 months

  • Final period allowed by TCGA92/S223(2) = 36 months

The relief is 39 + 36 x £60,000 = £44,554


The chargeable gain will be £15,446 before 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.

If the land had been disposed of on or after 6 April 2014 the final period exemption would be limited to 18 months see CG64985.