CG65126 - Private residence relief: example: disposal partly within permitted area: separate asset
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 Agency 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.