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HMRC internal manual

Capital Gains Manual

Private residence relief: purpose of realising gain: ITA07 S756

ITA07 S756

Restrictions to relief under TCGA92/S224 (3) most commonly arise where expenditure has been incurred in connection with the reconstruction or redevelopment of a building. You should begin by considering whether any profits which have arisen can be regarded as arising from a venture in the nature of trade.

If you accept that the profit that has arisen is capital in nature rather than income ITA07/S756, which is described at BIM60300 onwards, cannot apply. This is because ITA07/S767 prevents Section 756 from applying to a gain accruing to an individual which is exempt from Capital Gains Tax by virtue of TCGA92/S222-TCGA92/S226, or which would be so exempt but for the application of Section 224(3).