We have agreed an option to sell part of our land to a developer. Our total area including house, garden and paddock is arguably just under or just over the 0.5 hectare limit for capital gains tax (CGT) principal private residence (PPR) relief purposes. We may have to pay CGT on the excess area should it turn out to be over. My main issue is whether our paddock qualifies as ‘grounds’. It is attached to our garden and fenced off from the garden itself, which includes a stable block. We have never used it beyond having it mowed and having the odd walk around it and an afternoon picnic. It is more ornament than garden and consists solely of grass and is surrounded by large trees.  

Arthur Weller replies:  

If you look at HMRC’s Capital Gains manual at CG64360, it appears that in your circumstances, you should be able to claim PPR relief on the sale of your land. It refers to ‘ornament’ that you mentioned, and states: ‘Generally speaking, you should accept that land surrounding a residence which is in the same ownership, is the grounds of the residence, unless it is in use for some other purpose.’