Developing the garden

Considerations When Selling Part of Your Garden

With the growing demand for housing, many homeowners are tempted to sell part of their garden for development. When structured correctly, this can result in minimal tax liability, but getting involved in the actual development process could lead to unexpected tax consequences.

Understanding how tax on garden development applies is essential to maximise profits while remaining compliant with HMRC rules.

Capital Gains Tax vs Income Tax on Garden Development

If you sell part of your garden to a developer without taking an active role, any gain may be subject to Capital Gains Tax (CGT). In some cases, Principal Private Residence Relief (PPR) could apply, reducing or eliminating CGT liability.

However, if you:

  • Develop the land yourself (e.g., building houses and selling them).
  • Take a share of the development profits rather than a simple land sale.
  • Engage in multiple property development projects.

Then HMRC may classify your earnings as trading income, meaning Income Tax applies instead of CGT. This can significantly increase your tax bill, as income tax rates are higher than CGT rates.

How We Can Help

At Lewis Brownlee, we specialise in advising homeowners on tax on garden development, ensuring efficient tax planning before selling or developing land. So, if you are at all curious about the tax implications, rest assured, we have leaders in the field who can advise you.

Why not take us up on one of our free introductory meetings? These are designed specifically to allow you to come and meet us. Then you can find out what we do and how we do it before you commit. It really is the perfect way to help you understand the best tax strategy for your situation. So, when you’re ready, we’re ready. together, let’s see how we can help partner in your success!

For expert tax advice, contact us today.

Selling garden land for development requires careful planning to minimise tax liabilities. Understanding whether income tax or capital gains tax applies is crucial for maximising profits and staying compliant.