FA03/S116 sets out the statutory definition of residential property for the purposes of disadvantaged areas relief. Residential property is (FA03/S116(1)(a)) a building that, at the date of the relevant transaction, is
The definition includes (FA03/S116(1)(b)) land that is or forms
part of the garden or grounds of a such building (including any
building or structure on such land).
FA03/S116(2) specifies that buildings used for the following purposes are residential property:
If a building meets any one of these separate tests it will be
treated as residential property, as will any garden or grounds
belonging to it or any interests or rights attaching to it.
“Garden or grounds” includes land which is needed for the reasonable enjoyment of the dwelling, having regard to the size and nature of the dwelling. HMRC will apply a similar test to that applied for the capital gains tax relief for main residences (section 222(3) Taxation of Chargeable Gains Act 1992).