CG65126 - Private residence relief: disposal part permitted area: separate asset
H acquired a house with two hectares of garden in June 1982 for £150,000. It was used as her residence throughout her period of ownership and was her main residence from June 1982 to January 1989. In May 1992 she sold a piece of land of one hectare for £100,000 and submitted a computation of the gain on the separate asset basis.
The Valuation Office Agency agreed that
- 0.2 hectares of the land sold is within the permitted area the apportionments should be
|
1982 |
1992 |
0.2 hectares within permitted area |
£4,000 |
£20,000 |
remainder |
16,000 |
80,000 |
|
£20,000 |
£100,000 |
The gain is computed as follows:-
|
|
0.2 hectares |
Remainder |
|
|
£ |
£ |
|
Disposal proceeds |
20,000 |
80,000 |
less |
Cost |
4,000 |
16,000 |
|
Unindexed gain |
16,000 |
64,000 |
less |
Indexation: 0.2 hectares 0.402 x 16,000 |
|
2,808 |
|
|
|
|
|
Remainder 0.702 x 16,000 |
|
11,232 |
|
Net gain |
13,192 |
52,768 |
The gain arising on the 0.8 hectares outside the permitted area is wholly chargeable but some relief is due on the 0.2 hectares within the permitted area.
Private Residence Relief
- Period of ownership June 1982 to May 1992 = 120 months
- Period of only or main residence
June 1982 - January 1989 = 80 months
- Final period allowed by TCGA92/S223 (2) = 36 months
The relief is |
8 0 + 3 6 |
x 13,192 = £12,753 |
|
120 |
|
The chargeable gain will be £439 + £52,768 = £53,207 before annual exempt amount.
If the dwelling house had always been her only or main residence the gain on the 0.2 hectares of land within the permitted area would have been wholly relieved and a computation in respect of that land would only have been needed to establish how much of the cost of the property should be apportioned to this disposal.
NOTE. If a taxpayer is within the charge to Capital Gains Tax, neither indexation allowance nor taper relief apply to disposals of assets on or after 6 April 2008. Previously indexation allowance had been frozen at April 1998. For indexation allowance see CG17207+ and for taper relief see CG17895+.
