Do I Pay Tax If I Sell Part of My Garden or Land

If you own a house with a large garden or plot of land, selling part of it can be a practical way to raise money or allow development without moving home. However, you may wonder whether you need to pay tax on the sale. In the UK, tax on selling land or part of your garden depends on several factors, including how the land is used, whether it forms part of your main residence, and whether you are considered to be trading. This article explains when Capital Gains Tax applies, when it does not, and how to calculate any potential tax liability.

Selling Part of Your Garden and Capital Gains Tax

In most cases, selling part of your garden or land can trigger Capital Gains Tax (CGT) because you are disposing of a portion of your property. CGT is charged on the profit (gain) you make from selling or gifting an asset that has increased in value.

However, there are specific exemptions for land that is considered part of your Principal Private Residence (PPR) your main home. If the land you sell qualifies for Private Residence Relief, you may not owe any CGT at all.

When You Do Not Have to Pay Tax

You will not usually have to pay Capital Gains Tax when selling part of your garden if all of the following conditions are met:

  1. The land being sold is part of the garden or grounds attached to your only or main home.

  2. The total area (including your house and remaining garden) does not exceed half a hectare (approximately 1.24 acres).

  3. The land has not been used for business purposes or development prior to sale.

  4. The land has not been divided or sold off for profit before.

This exemption exists because the land is considered part of your private residence rather than a separate investment. For example, if you sell a section of your back garden to a neighbour or developer while still living in your house, you will likely be exempt from CGT, provided the land falls within these limits.

When You May Have to Pay Capital Gains Tax

You may have to pay CGT if any of the following apply:

  • The area of land you sell exceeds half a hectare, or your total garden and grounds are larger than that limit.

  • The land sold was not used as part of your main residence, for example, if it was rented out or used for business.

  • You bought the property or land with the intention of selling it for profit.

  • You sell land after moving out of the property.

If any of these situations apply, HMRC may treat the sale as a disposal of an investment, and CGT will be due on the gain.

Example of a Tax-Free Sale

You live in a house with a large back garden of just under half a hectare. A developer offers to buy part of it to build a single house. You sell that section but continue living in your home.

Because the land sold is part of your main residence and within the permitted area, Private Residence Relief applies, and no Capital Gains Tax is due.

Example Where Tax Applies

Suppose you own two acres of land with your home. You decide to sell one acre that lies beyond your garden boundary to a developer for £200,000.

Only half a hectare (1.24 acres) of land can qualify for Private Residence Relief. The remaining area is taxable, and you must calculate the proportion of the gain that relates to the excess land. You may then owe Capital Gains Tax on that portion at either 10 percent or 20 percent, depending on your income tax band.

Calculating Your Capital Gain

If the sale is taxable, you calculate the gain by working out the difference between what you receive and the portion of your original property cost attributed to that land.

The basic steps are:

  1. Estimate how much of your property’s original purchase price relates to the land sold.

  2. Deduct any associated costs such as legal fees, survey costs, and agent fees.

  3. Subtract this total from the sale proceeds to determine your gain.

  4. Apply your annual Capital Gains Tax allowance (£3,000 for 2025–26).

The remaining gain is taxed at your marginal CGT rate: 10 percent for basic rate taxpayers and 20 percent for higher or additional rate taxpayers.

Because property valuations and apportionments can be complex, it is often wise to seek an accountant’s help to ensure the calculations are correct.

If the Land Is Used for Development

If you grant planning permission or carry out work to make the land more valuable before selling it, HMRC may consider that you are developing land for profit. In this case, the gain may be taxed as income rather than a capital gain, potentially at a higher rate.

For example, if you split the land into several plots, install utilities, or build access roads before selling, HMRC could treat you as running a trade rather than simply disposing of part of your property. The tax bill in this case can be significantly higher.

Selling Land After Moving Out

If you sell part of your garden or land after you have moved out of the main residence, Private Residence Relief may no longer apply. The land would then be treated as a separate asset, and Capital Gains Tax would be due on any increase in value since you bought it.

If the sale takes place within nine months of moving out, you may still qualify for full relief, as HMRC allows this grace period for former homes.

Inheritance Tax Considerations

If you inherit a property with large grounds and later sell part of the land, Inheritance Tax will not apply to the sale itself, but the Capital Gains Tax rules still apply. You will be liable for CGT based on the difference between the land’s value at the date of inheritance and the eventual sale price.

How an Accountant Can Help

An accountant experienced in property taxation can:

  • Assess whether Private Residence Relief applies to your land sale.

  • Value the land accurately for CGT purposes.

  • Allocate purchase costs fairly between the house and the portion of land sold.

  • Calculate your gain and tax liability.

  • Advise on timing and structuring the sale to reduce or defer tax.

Professional advice is particularly important when selling land for development, as HMRC’s rules can be complex and open to interpretation.

Summary

You may not need to pay Capital Gains Tax if you sell part of your garden or land that forms part of your main residence and the total area is within half a hectare. However, tax may apply if the land is larger, used for other purposes, or sold after moving out.

HMRC examines each case individually, so clear records, valuations, and professional advice are essential. By confirming whether your sale qualifies for Private Residence Relief and calculating gains correctly, you can avoid unexpected tax bills and ensure full compliance with UK property tax law.