In Leslie and Catherine Phillips v HMRC [2020] TC7859, the First Tier Tribunal (FTT) allowed a claim for Private Residence Relief for a house with a larger garden than the area set within the tax rules. Evidence showed that people in the country like bigger gardens and some neighbouring properties also had large gardens too.

  • The couple sold their home to a developer.
  • Its garden and grounds extended to 0.94 of a hectare, this exceeds the statutory maximum 'permitted area' of 0.5 of a hectare for the purposes of Capital Gains Tax (CGT) Private Residence Relief (PRR).
  • HMRC found out about the disposal from Stamp Duty Land Tax records and made a Discovery Assessment of £162,820 denying full PRR on the basis that the property was not of a size and character which required gardens/grounds of more than the normal statutory maximum area.
  • Mr and Mrs Phillips made an Appeal against the assessments on the basis that the whole of the area of 0.94 of a hectare is, having regard to the size and character of the property, required for the reasonable enjoyment of the property and therefore forms part of the permitted area to which PPR relief applies.

The FTT found that:

  • The property consisted of a main house, a three-car garage, a one-bedroom cottage, a swimming pool and substantial gardens. The property was surrounded by the road, allotments and a field.
  • The expert witness for the taxpayers said that similar houses in the neighbourhood all had large gardens too and the Phillips' house was proportionally bigger and so required more grounds. He noted that the property was sold to the Philips on the basis of its large garden.
  • There was debate about the size of grounds were required for reasonable enjoyment of a more rural property.

The FTT agreed that the large garden was required for the reasonable enjoyment of the property and allowed the appeal.


  • It remains to be seen whether an appeal has been made on this case, it seems likely as it is quite difficult to see why the rule on the permitted area should be dismissed just because one lives in a semi-rural setting.
  • Whilst the judgment considers the size of the property it does not appear that there was anything so remarkable about the character of the house or grounds that would warrant it.
  • Past cases have considered houses more akin to heritage assets with outbuildings in their curtilage.

Useful guides on this topic

CGT: Private Residence Relief
CGT relief on disposal of your main residence

Garden: Selling and developing CGT and income tax
Avoid tax pitfalls with this handy guide

How to appeal a decision of HMRC
Key steps in appealing a decision of HMRC.

How to appeal a tax penalty
Essential reading in cases were there are penalties too

Discovery assessment and time limits
How far HMRC can go back, what conditions must be met for a valid discovery

Penalties: Error in a return or document
How work out penalties for different forms of inaccuracies

External links

Leslie and Catherine Phillips v HMRC [2020] TC7859