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HMRC internal manual

Capital Gains Manual

Non-Resident Capital Gains Tax (NRCGT) - Disposals on or after 6 April 2015: Disposals of a UK Residential Property Interest: Damage to a dwelling

Sch B1/para 6 provides special treatment where a building that has formed, or formed part of, the land in question has at any time in the relevant ownership period been temporarily unsuitable for use as a dwelling as a result of damage.


Normally under Sch B1/para 4(10) temporary unsuitability is disregarded in deciding whether a building is suitable for use as a dwelling.  But that provision does not apply if the temporary unsuitability resulted from damage to the building (or to part of the building, by virtue of Sch B1/para 6(8)), and the following conditions are met -

  • the damage was accidental, or otherwise caused by events beyond the control of the person disposing of the interest; and
  • as a result of the damage, the building was unsuitable for use as a dwelling for a period of at least 90 consecutive days.


The 90-day period for the purposes of paragraph 6 must end at or before the end of the relevant ownership period, but may begin at any time, irrespective of the ownership period.


Where these conditions are met, work done in the 90-day period to restore the building to suitability for use as a dwelling does not count, for the purposes of Sch B1/para 4, as construction or adaptation of the building for use as a dwelling.

However, these conditions are not regarded as met if the damage occurred in the course of work that -

  • was being done for the purpose of altering the building, and
  • itself involved, or could be expected to involve, making the building unsuitable for use as a dwelling for 30 days or more.

In this context “alteration” includes partial demolition (Sch B1/para 6(8)).


The issue here is whether the damage is accidental or beyond the control of the person disposing of the interest.  That would not be the case if the person was carrying out a process of alteration which they could reasonably expect would in itself make the house unsuitable for use as a dwelling.