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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3811
Experience:  FCCA FCMA CGMA ACIS
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I have gained planning permission to build a house in my

Customer Question

I have gained planning permission to build a house in my side garden. My Intention was to build and sell. I believe I may be subject to capital gains tax if I do this, however if make it my PPR I would be exempt after a period of time is this correct?
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.

What is the overall area of the whole plot upon which your house and side garden stand. Once I know this I can advise you further.

Customer: replied 1 year ago.
Hi Keith,Its under 0.5 hectares I believe.
Customer: replied 1 year ago.
I am just getting the exact size now Keith, been told 5 mins by the Architect.
Customer: replied 1 year ago.
Are you still there Keith?
Expert:  bigduckontax replied 1 year ago.

HMRC Helpsheet 283 states:

'If your garden and grounds do not exceed half a hectare (which is a little over 1 acre), you are entitled to relief for all of it'

Thus if this is the case, as you say it is, then it is within the 'permitted area,' half a hectare, and Private Residence Relief (PRR) applies to the whole holding which would be entitled to the relief. Thus any gain on the ultimate sale of part or all of the site would be entitled to PRR and this relief is at 100%; thus no Capital Gains Tax (CGT) to pay.

Customer: replied 1 year ago.
Hi Keith, So my house, plot I intend to sell and back garden all need to be under half a hectare combined or does it just apply to the plot I intend to build on?
Expert:  bigduckontax replied 1 year ago.

To obtain PRR on the whole shooting match the total plot must be within the premitted area. If it is so any sale of the plot or part thereof would be entitled to PRR.

Customer: replied 1 year ago.
Thanks thats great!
Expert:  bigduckontax replied 1 year ago.

Delighted to have been of assistance.

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Expert:  bigduckontax replied 1 year ago.

Thank you for your support.

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