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HMRC internal manual

Capital Gains Manual

Private residence relief: purpose of realising gain: expenditure

TCGA92/S224 (3)

In determining whether there has been any expenditure during the period of ownership which could trigger a restriction to relief you should ignore the cost of obtaining

  • planning permission,


  • the release of any restrictive covenant.

In practice, the gain attributable to the expenditure on obtaining planning permission or on releasing a restrictive covenant would be a matter of speculation and would most likely be small. Furthermore, it would be straightforward to arrange for the purchaser of the property to incur the expenditure thus avoiding the application of Section 224(3) entirely. Nothing would be gained by considering whether such expenditure gives rise to a restriction of relief by virtue of Section 224(3).

The two most common applications of the second part of Section 224(3) are

  • acquisition by a leaseholder of a superior interest in the property, see CG65251+
  • conversion of a house into flats, see CG65265+.