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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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My UK house and gardens total 1.5 acres, if I sell am I liable

Customer Question

My UK house and gardens total 1.5 acres, if I sell am I liable for tax?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
I assume that you are referring to Capital Gains Tax (CGT) on disposal. In that case your house and garden are over the permitted area for Private Residence Relief (PRR) which relieves Capital Gains Tax at 100%.
Here is an extract from HMRC Help Sheet 283:
'If your garden and grounds exceed half a hectare, you may not be entitled
to relief [PRR} for all of it. The area for which you are entitled to relief is called the permitted area. It consists of the area that is required for the reasonable enjoyment of your dwelling house as a home. The size and character of your dwelling house must be taken into account.
If your garden and grounds exceed half a hectare, and you have disposed of
all or part of the garden and grounds, you should:
• enter details of the disposal and gain on pages CG 1 and CG 2, and
• explain in the ‘Any other information’ box, box 37, on page CG 2 of the
Capital gains summary pages why you think, if appropriate, all or part is
exempt from (CGT).
We may ask for further details in these cases and the District Valuer will be
asked to determine the size and location of the permitted area.'
So you see you could be liable for CGT on a proportion of any gain you make on disposal. The gain is calculated proportionally. The net selling price has the acquisition price deducted to compute the gain. The acquisition price is the purchase price plus costs of purchase plus any additions eg installation of double glazing, central heating or extensions. You do have an Annual exempt Amount of 11.1K to offset any gain made. Half a hectare is a little over an acre so only a small proportion would be taxable. Indeed, ifHMRC and the District Valuer may regard it as negligible and thus it may not attract their attention at all.
I do hope I have assisted you with your question and shed some light on your position.
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.