I am considering selling a part of the garden of a house which I own and which is let and always has been. I bought the house for £350,000 and it is now worth £450,000. The part of garden to be sold is about one-third of the whole plot. I am expecting to sell the plot for £125,000. I would expect that the remaining house and garden would retain its value. As I see it, I would make a capital gain of £125,000 and would be liable for capital gains tax on the whole amount. An alternative view might be that when I bought the house the value of the house alone was say £200,000 and plot £150,000. This would mean that the one-third plot had a value of £50,000, so in this scenario my gain would be just £75,000. What is your view on my tax position?

The (A / (A + B)) rule applies to your situation. See: www.hmrc.gov.uk/manuals/cgmanual/CG12730+.htm and www.hmrc.gov.uk/manuals/cgmanual/CG71800c.htm. You need to know how much you could sell the house and remaining land for, after having sold off this piece of land. Let's say this is £325,000 (£450,000 - £125,000). So (£125,000 / (£125,000 + £325,000)) = 27.7%. When 27.7% is applied to £350,000 the result is £97,222. This is therefore the base cost of this piece of land. So your gain is £125,000 - £97,222.