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bigduckontax, Accountant
Category: Tax
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Primary House Tax Question I have recently purchased a house

Resolved Question:

Primary House Tax Question
I have recently purchased a house (my main residence) and have managed to obtain planning to build another house in the garden. As this is my main residence and the land was purchased as a garden and adjoining the house, do I have to pay tax if I a) sell the land with planning or b) build the additional house and then sell that? What about if I sell my house with the land and planning as one whole plot (bearing in mind this is my main residence)
Any guidance appreciated on the type of liabilities that need to be considered and the % rates... the house was initially purchased for £320k
Many thanks
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Before I can assist you however I need to know the size of the original house and garden; this data is critical.
Customer: replied 1 year ago.

Hi Keith

The original house is a 3 bed detached on a total plot that is 21m wide and 30m deep (630m2)

Thanks

Expert:  bigduckontax replied 1 year ago.
That is 0.063 hectares and the permitted area under Capital Gains Tax (CGT) rules is 0.5 hectare. Any sale within the permitted area does not attract CGT as Private Residence Relief (PRR) applies to the whole plot. PRR relieves CGT at 100% so there will be no tax payable on disposal. Simple, as the Meercat in the TV advert would say! There remains one point; HMRC may class this is trading in land and charge you Income Tax (IT) instead of CGT on the gain. This has happened in the past even when only one property has been traded. I do hope that you have found my reply of assistance.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3363
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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