Definition of non-residential land

Hi, can I please confirm that if I sell some empty land (fields) to a developer it is classed as a non-residential property disposal, even if the developer has got planning permission to build residences on it (but has not started construction)? Thanks

Hi John,
Thank you for your question.
The Capital Gains Manual considers the distinction between residential and non-residential properties in the Non-Resident Capital Gains chapter, but the principles apply equally to disposals made by UK residents.
CG73758 - Non-Resident Capital Gains Tax (NRCGT) – Disposals on or after 6 April 2015 to 5 April 2019: Disposals of a UK Residential Property Interest: Building land and off-plan disposals(see  Advises that 'an interest in bare building land is not a residential property interest.
It would only become a residential interest once construction works commence'.
Without knowing your precise circumstances however, you should also consider the further guidance in the link regarding speculators that purchase property 'off plan'.
Depending on the terms of your contract with the purchasing developer, we would also recommend that you consider the guidance in:
BIM60645 - Profits from a trade of dealing in or developing UK land: 'Slice of the action' contracts and overage arrangements
Thank you 
 

Dear HMRC, I have a similar request albeit I am selling a piece of non residential land to a developer under contract for the purpose of residential development. However the land being sold will not comprise residential dwellings only a footpath and cycleway. The land has never comprised residential and its future use will again not comprise residential, I am of the belief that CGT should be correctly charged at 10/20%, I would be grateful if you could confirm. Sadly I fully expect the response to state 18/28% and I would accept this if the third rule as stated in the definition of residential property for the purpose of TCGA para 2 taken from the Non-Resident CGT A disposal of residential property referred to ‘land adjacent/associated with the land’ in question however it reads quite specifically that it is the ‘land being sold that shall involve a dwelling’ and this is not the case in this instance. Thank you.

Hi Rob Phipps,
The definition of residential property for the purposes of TCGA para 2 is taken from the Non-Resident CGT A disposal of a residential property can apply if;
The land has at any time in the relevant ownership period consisted of or included a dwelling, or
The interest in UK land subsists for the benefit of land that has at any time in the relevant ownership period consisted of or included a dwelling, or
The interest in UK land subsists under a contract for an off plan purchase (a contract for acquisition of land that at some point shall involve a dwelling).                                                                                                                                                                                                                                 If the land you are selling doesnt meet all the criteria above then it is non residential and would qualify for the 10/20% rate.
Thank you. 

Thank you

I have sold a small plot of 0.2 Hectares as part of a subject to planning sale agreement. The land has outline planning permission and construction has not started. I too am keen to understand if this is considered residential property. I am confused by the responses to a similar request made 12 months ago as the two responses appear to contradict each other. Response one says land only becomes residential once construction starts Response two says land sold that at some point shall involve a dwelling is considered residential land. Which is correct? thank you

I have a question similarly relating that I cant find a answer to elsewhere, so sorry to jump in on this thread. We are selling a small field which has always been used for agricultural purposes, we graze our pet sheep and ponies on it and make our own hay. It is being sold to a family who will utilise it in the same way. The field has never been used or classed as residential and will not in the future be used as residential. I am assuming the Capital Gains will be 10/20% but I dont know how to report and pay it. When I log onto the website to report and pay it asks if its residential (its not), and when I click no, it then says I cannot continue. Please can you advise how I report and pay Capita Gains on a small piece of agricultural land? Thank you

Hi Tina Evans,

You will need to use the real time section for this as the one you have selected is for residential property only. 

Report and pay your Capital Gains Tax

Thank you.

Hi CMitchell,
This can be confusing the way the legislation is worded so this may be why you were given two answers.
Please refer to:
CG73550 - Residential Property gains .
But also directly to the legislation at Taxation of Chargeable Gains Act 1992 (legislation.gov.uk)
It would be classed as a residential property where 'the interest in land subsists under a contract for the acquisition of land where a building is to be constructed or adapted for use as a dwelling.
It then goes on to clarify the basic meaning of a 'dwelling'.
It can become complex and all we can do is refer you to the guidance and legislation as we do not have the full facts of the contact/agreement etc and you may wish to seek independent financial advice.
Thank you.