We sold our house 12 years ago, but the buyer did not want the land surrounding the house as well. Since the sale, we have used the land for recreational purposes; there is a pond and woods to walk in. We have now obtained planning on the land, and we are looking to sell. Would this be subject to capital gains tax? We have owned the land for 29 years in total.  

Arthur Weller replies  

See HMRC’s Capital Gains Manual at CG64377, which refers to the case Varty v Lynes; in that case, Mr Lynes disposed of a dwelling-house whilst retaining part of the garden, which he disposed of at a later date. The High Court held that no relief was due in respect of the later disposal because the principal private residence (PPR) relief conditions of TCGA 1992, s 222(1)(b) were to be applied at the date of disposal of the retained land, and at that date it was no longer land which Mr Lynes held with his residence as its garden or grounds. Therefore, to qualify for relief, land must be held together with the residence on the date of disposal. So, land which is disposed of separately before the disposal of the dwelling house may qualify for PPR relief if the other conditions are fulfilled. However, land which is disposed of separately after the disposal of the residence cannot qualify for relief. So, in your scenario, it appears that this sale is not eligible for PPR relief.