PPR relief and half hectare rule

PPR relief and half hectare rule

Didn't find your answer?

Hi all, firstly I have reviewed this and other resources to find the answer so if it has been posted here before and I missed it apologies. I am sure I read this somewhere but can't for the life of me find out it again, hope you can help.

As is well known the permitted area around a home for full PPR relief must be half a hectare or less. If the garden is over half a hectare, but the plot sold for development or whatever is less than half a hectare, and all other conditions are met i.e. not fenced off etc., does the disposal need to go on a tax return? My original instinct would be yes and to claim PPR relief on reasonable enjoyment and expect to argue the toss, but I am sure I read recently that as long as the area sold is under 0.5 hectares then there isn't a problem. In other words it is the area sold that is relevant not the overall size of the garden.

Thanks for looking and hopefully someone can tell me I am not going mad.

Replies (12)

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Portia profile image
By Portia Nina Levin
02nd Sep 2014 16:20

That can only be one place

The only place I have ever seen this notion that the half-hectare only applies to the area sold is in this Taxation article: http://www.taxation.co.uk/taxation/Articles/2006/10/05/213471/permission...

My own interpretation of section 222(1)(b) is that the words "up to the permitted area" qualify "its garden and grounds", which includes all of the land so occupied and enjoyed, rather than just the "land" that has been disposed of.

That is to say that section 222(1)(b) says "land which he has for his own occupation and enjoyment with that residence as its garden or grounds up to the permitted area", rather than "land, up to the permitted area, which he has for his own occupation and enjoyment with that residence as its garden or grounds"

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Replying to Vile Nortin Naipaan:
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By TaxSpud
02nd Sep 2014 16:39

Thank you Portia for the link and your comments, very interesting and at least I am not going completely mad. I do recall reading that artcile and that must be what was stuck at the back of my mind.

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By duncanedwards
02nd Sep 2014 18:04

Not sure ...

what you reviewed but the question was raised on here a week ago.

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Replying to Chris.Mann:
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By TaxSpud
03rd Sep 2014 08:48

Well I have again tried garden, hectare, half hectare etc in any answers search engine and its not coming up with anything a week ago, but thanks for your helpful input

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Replying to Chris.Mann:
Portia profile image
By Portia Nina Levin
03rd Sep 2014 09:41

Show us!

duncanedwards wrote:

what you reviewed but the question was raised on here a week ago.

I have not seen this particular question asked before. I have seen other questions around similar issues, but not about the precise technical point.

If it has come up, perhaps you can show us all where it is, as I would be interested in any other responses.

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Replying to Nick Graves:
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By duncanedwards
04th Sep 2014 10:32

Search function

Portia Nina Levin wrote:

I have not seen this particular question asked before. I have seen other questions around similar issues, but not about the precise technical point.

If it has come up, perhaps you can show us all where it is, as I would be interested in any other responses.

 

The previous question was headed "PPR exemption - can it be due on a bigger area that 0.5 hectares?" 

It's currently 11th in the search results if you search on "PPR" or second if you search on "hectare".

 

You must be posting in your sleep, Portia, as you posted a cheeky little risque comment on the said thread.

 

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By Kirkers
03rd Sep 2014 09:49

I have also seen this

I have also seen a similar question before. The one I recall was posted much more than a week ago and from memory I believe it was simply titled 'PPR' or something, which I imagine will throw up many unrelated questions and must be quite difficult for you to search for.

 

I'll see if I can find it though.

 

EDIT - https://www.accountingweb.co.uk/anyanswers/question/ppr-exemption-can-it...

Does this help?

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Portia profile image
By Portia Nina Levin
03rd Sep 2014 10:20

Your link does not work

Let me try: https://www.accountingweb.co.uk/anyanswers/question/ppr-exemption-can-it...

It is a similar question, but it still is not the same question. The two questions examine different points, and I, personally, do not find the other question particularly interesting.

Incidentally, my interpretation of section 222(1)(b) is supported by CG64800, but then both HMRC and I could be wrong. See http://www.hmrc.gov.uk/manuals/cgmanual/CG64800.htm

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By TaxSpud
03rd Sep 2014 11:13

Thank you again Portia and Kickers for trying to help. After searching this site and other similar ones for a good hour and half yesterday I could not find anything on the precise technical point I raised although as you say many similar queries on selling part of a garden. Hence my post. The only specifc reference is the Taxation article as per Portia's link.

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Northumberland flag
By MJShone
04th Sep 2014 07:49

I agree with Portia.

s222(1) says "This section applies to a gain accruing to an individual so far as attributable to the disposal of...a dwelling-house which is...his only or main residence, or...land which he has for his own occupation and enjoyment with that residence as its garden or grounds up to the permitted area." "Permitted area" is then defined in s221(2) and (3) as an area (inclusive of the footprint of the house) of half a hectare or such larger area as is required for the reasonable enjoyment of the dwelling-house.  S222(4) says that where the garden or grounds runs to more than the permitted area then the bit of land most suitable for occupation and enjoyment with the house is the bit that's covered by the exemption.  

I can see that you could read s222(1) as "This section applies to a gain accruing to an individual..[on]...the disposal of...land which he has...as [a] garden...up to the permitted area" ie the exemption applies to a disposal of an area of land of up to half a hectare, so long as that land forms part of the garden or grounds. However, I think subsections (2), (3) and (4) make it quite clear that it's the garden and grounds that are limited to half a hectare (or larger, if appropriate), not the land disposed of.

So - you can't necessarily dispose of your garden in half hectare chunks and pay no CGT. (You could if the whole of the garden was necessary for the enjoyment of the house but for reasons of penury you had to seel, or you were giving the land to family members.)

Maybe I'll be wrong and there'll be a case like Nelson Dance which says that everyone's understanding up until now has been wrong!

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Portia profile image
By Portia Nina Levin
04th Sep 2014 10:43

As observed above

The said thread queries a different technical point.

And my cheeky, little, risqué comment was posted yesterday, after Kirkers posted the link to it.

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Replying to DJKL:
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By duncanedwards
04th Sep 2014 11:17

Having a laugh

Portia Nina Levin wrote:

And my cheeky, little, risqué comment was posted yesterday, after Kirkers posted the link to it.

 

Well, it was well worth waiting for.  I laughed and laughed when I read it.

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