Simon Littlejohns, tax partner at PKF in Birmingham, offers some valuable advice to homeowners.
You must certainly do your homework selling off any part of your garden to a developer. Otherwise, you might be slapped into detention by the taxman.
Garden grabbing is a common phrase at the moment, with homeowners looking to raise money from part of the land that they own that they feel they can cash in.
In some cases, developers will buy a house and all the land it stands on in order to create access to a site which has been created through a series of small garden grabs.
But before you get excited at the prospect of making money by selling land you should check what the likely tax situation is going to be.
The main home is generally exempt from tax under the Principal Private Residence (PPR) exemption.
PPR generally covers a garden of half a hectare but the exemption can be extended to a larger garden if you can show that a larger garden is needed for the "reasonable enjoyment" of the house, given its size and character.
However, if you are selling off part of the garden, HMRC could argue that this part was obviously not needed for the reasonable enjoyment of the garden - because you clearly feel you can sell it off - and therefore a taxable gain may arise from such a sale.
Homeowners who sell both the house and the garden together are likely to be covered by the PPR rules, but if they sell the garden and the house in separate transactions, they must ensure that the garden is sold first to assist with PPR arguments.
There may be further PPR issues where the house has been used for work, which may incur restrictions on what exemptions can be claimed.
You need to research this and work your figures out very carefully before you receive any challenge from HMRC.
And you need to ensure that you not only understand the questions but also have the answers to them.
If there is a second home involved, you need to work out which you want to be covered by PPR and make the necessary election.
The timing of occupation of your first and second homes is very important as PPR coverage is given for temporary absences and a period after cessation of occupation.
The sums involved in this procedure are not inconsiderable to homeowners affected by possible loss of PPR exemptions, especially where the owner is considered asset rich but cash poor and sees the sale of part of the garden as a way of raising much needed money.
Seek professional advice before you proceed with any such sale, as HMRC is unlikely to let you change the elections and any application for exemptions once the procedure is underway and certainly not when the deal has been concluded.