Principal Private Residence Relief

Reducing CGT with Principal Private Residence Relief

Tax planning for the family home

If you're looking to reduce your capital gains tax charge on the disposal of UK or overseas property, claiming principal private residence ('PPR') relief can significantly reduce your tax bill.

The rules applying to PPR relief aren't straightforward but we have a number of books and articles that will clearly explain when you can and can't claim this relief. A common area of confusion arises in the application of the principal private residence relief election. Many people think this applies when you own two properties and allows you to avoid choose which property will attract PPR relief.

This is not strictly the case. In order to qualify for the election a property needs to be your residence - not simply a property that you own. 'Residence' implies that there must be some degree of occupation by you. Therefore a property that was let, and never occupied by you couldn't qualify as a residence for this purpose. There are though other options that could be considered.

Interactive PPR Relief Tool
PPR Relief Calculator PPR Relief Calculator
Calculating the amount of PPR relief can be difficult. This calculator does all the work for you. Just enter details of your periods of ownership and occupation of the property and our PPR relief calculator lets you know the amount of PPR relief you will qualify for. keep reading

Interactive Private Residence Relief Tool Interactive Private Residence Relief Tool
Qualifying for Principal Private Residence ("PPR") Relief can substantially reduce capital gains tax on the disposal of property or land. This interactive tool guides you through the rules relating to PPR relief to ensure you maximise your relief. Available for Gold Members Only. keep reading


Sign up today to read unique tax reports and obtain online guidance on using principal private residence relief to reduce your tax bill

Subscribe now for income tax, capital gains and inheritance tax savings

Principal Private Residence Relief
Valuing property to maximise PPR relief - USERNAME: Will80 - 27/04/2015
Tax Question: Dear Sir, I have purchased a new home which will be my permanent resident address and I am thinking whether or not convenient to rent out or sell my old private residence, considering that current market prices embed a significant potential capital gain. If the property is sold within 18 months, thanks to principal private residence relief, I would not in fact pay any capital gain tax. If I rent it out, with the current rules, I will have to potentially pay capital gain tax at a future date. Assuming that I expect no more significant capital appreciation for that home, it would be convenient to sell it now and realise the capital gain. In fact, I assume that the 40,000 relief available if I start the rental business won't make up for the additional taxes to be paid on a future disposal. My question is whether it is possible to get independent valuations for my previous main private residence from multiple agents and crystallize the value of the home as of today (based on multiple independent valuations), then start renting out the property, so that on a future disposal I would only be liable of potential capital gain taxes on the difference between the sale value and the value of today (today being the date of the independent valuations and the day in which the current home won't be any more my principal private residence). Would HMRC accept such valuation? keep reading

Beneficial ownership, receiving a share of the proceeds and reducing capital gains tax Beneficial ownership, receiving a share of the proceeds and reducing capital gains tax
09/03/2015
When looking at the capital gains tax position on the disposal of property, the beneficial interest can have a significant impact. CGT follows primarily the beneficial, as opposed to the legal interest. So the legal title holder is not necessarily the one subject to CGT on the disposal. Good examples of this are bare trustees and nominees. This article looks at ownership of property and tax planning from the splitting of beneficial and legal interests, particularly where there is to be a share of the proceeds of sale keep reading

CGT and separation/divorce CGT and separation/divorce
06/03/2015
Ensuring that transactions are correctly structured where there is a planned separation or divorce can significantly reduce the amount of CGT. In this article we look at how separation and divorce affects CGT and how to ensure transfers are tax efficient keep reading

Follow on questions on PPR relief - USERNAME: massky - 25/02/2015
Tax Question: Thank for replaying to my first post, I have additional questions related to ask you regarding my first post. Q: 1a] I am allowed to rent my PPR in UK while being absent working overseas and would that still counts as my PPR in UK ? A: 1a] The property needs to be occupied as a residence for it to qualify for the deemed periods of occupation. If it was let strictly speaking it wouldn't be available for occupation as a residence. Therefore my initial view would be that the deemed period of occupation in S223[3][b] wouldn't apply. Note however that from April 2015 in order for a UK property to be your main residence you would need to either be UK resident or present in the UK for at least 90 nights. Q: 1b] UK property were I reside, it's my residence since I acquire it, and this is only property I have, it was never let before. It will be let ONLY if I take up employment overseas. When I return home to UK from working overseas, it will be my residence again. Would S223 [3] [b] apply to this ? A: 1b? -------------- Q: 2a] My wife and child will remain in UK but re-locate to another part of city close to her family and rent a flat there. Would this jeopadrise my PPR even I am solo owner of my PPR ? A: 2a] You and your wife would both need to have the same PPR relief if you are not separated. Q: 2b] Separating from wife, is it suffice ? Do you need to get divorced lawfully? A: 2b ? -------------- Q: 3a] At employment overseas, does employer have to pay for my accommodation to not jeopardise my PPR in UK ? I am allowed to rent a flat, or share a flat while working overseas ? A: 3a] If you acquire any kind of tenancy or interest in a property whilst living there, it would be classed as a residence and the deemed period of occupation wouldn't apply to the UK property. Therefore you'd need to occupy under a licence. Q: 3b] Occupying under a licence, are you saying that only employer who you work for overseas have to pay for your accommodation, or tenancy agreement have to be in employers name ? A: 3b? keep reading

PPR relief on UK property if I move overseas - USERNAME: Massky - 23/02/2015
Tax Question: Hi All, I'll appreciate if someone can help here as I find it difficult to understand given this situation. I reside in my only PPR with my wife and child, I am the sole owner of my PPR. I am interested taking up this job position overseas for considerable time. My wife and child will remain in London as she works as Dentist and would not like to lose here job and could not join me overseas. While taking employment overseas, I will be renting my PPR in London, and will return to London only for short trips to see my wife and child, or maybe 10 days for Xmas and N.Y Questions: 1] I am allowed to rent my PPR in UK while being absent working overseas and would that still counts as my PPR in UK ? 1] My wife and child will remain in UK but re-locate to another part of city [close to her family] and rent a flat there. Would this jeopardise my PPR even I am solo owner of my PPR ? 2] At employment overseas, does employer have to pay for my accommodation to not jeopardise my PPR in UK ? I am allowed to rent a flat, or share a flat while working overseas ? TCGA92/S223 [3] [b] explain this very well, but I am unsure of all rules applied in given situation. Any helps keep reading

Examples showing how to establish non residence and still qualify for PPR relief Examples showing how to establish non residence and still qualify for PPR relief
11/02/2015
In this Practitioners Zone article we run through a couple of examples showing when and how an individual can retain non residence as well as still retaining an entitlement to PPR relief on a UK property keep reading

PPR relief on a foreign property - USERNAME: regaziz - 10/02/2015
Tax Question: A person originally from the Middleast. Came to UK in 2000 and he's been British Citizen since 2003. He has a property in the middle east which was his main residence for 20 years until he left in 2000 and it's been empty since then. He is thinking of selling it and bringing the money to UK. Is he liable to any Capital Gain or other taxes? If he is liable, will he be entitled to any relief or allowances? Many thanks keep reading

Occupying trust property as main residence and PPR claim/Pro forma claim - USERNAME: PSG1 - 03/02/2015
Tax Question: A residential property comprised in a settlement has been distributed to a beneficiary [the settlor] using discretionary powers available within the trust deed. As far as CGT is concerned, as there was no claim for Holdover Relief when the property was transferred into the trust, the property qualifies as the Main Residence and relief should be available to the trustees so that no Capital Gains Tax is payable on the transfer of the property from the trust. My understanding is that unlike the case for individuals, trustees must claim Main Residence Relief under s225 TCGA 1992. So for the Relief to be effective there must be a joint claim made in writing by the trustees and the beneficiary entitled to occupy the residence. In other words, a formal claim must be made to HMRC. My question is- do you have suitable wording which could be used for this claim in these circumstances please? Given that neither the Trust nor the beneficiary file tax returns can this simply be lodged in the form of a letter to HMRC or will the Trust need to be registered under SA and a return submitted for the tax year in which the transfer took place? keep reading

Capital gains tax help

We can provide you with help on the application of the principal private residence relief rules via our online Capital gains tax help service.

Tax Articles on Principal Private Residence Relief

Valuing property to maximise PPR relief - USERNAME: Will80 - 27/04/2015
Tax Question: Dear Sir, I have purchased a new home which will be my permanent resident address and I am thinking whether or not convenient to rent out or sell my old private residence, considering that current market prices embed a significant potential capital gain. If the property is sold within 18 months, thanks to principal private residence relief, I would not in fact pay any capital gain tax. If I rent it out, with the current rules, I will have to potentially pay capital gain tax at a future date. Assuming that I expect no more significant capital appreciation for that home, it would be convenient to sell it now and realise the capital gain. In fact, I assume that the 40,000 relief available if I start the rental business won't make up for the additional taxes to be paid on a future disposal. My question is whether it is possible to get independent valuations for my previous main private residence from multiple agents and crystallize the value of the home as of today (based on multiple independent valuations), then start renting out the property, so that on a future disposal I would only be liable of potential capital gain taxes on the difference between the sale value and the value of today (today being the date of the independent valuations and the day in which the current home won't be any more my principal private residence). Would HMRC accept such valuation? keep reading

Beneficial ownership, receiving a share of the proceeds and reducing capital gains tax Beneficial ownership, receiving a share of the proceeds and reducing capital gains tax
09/03/2015
When looking at the capital gains tax position on the disposal of property, the beneficial interest can have a significant impact. CGT follows primarily the beneficial, as opposed to the legal interest. So the legal title holder is not necessarily the one subject to CGT on the disposal. Good examples of this are bare trustees and nominees. This article looks at ownership of property and tax planning from the splitting of beneficial and legal interests, particularly where there is to be a share of the proceeds of sale keep reading

CGT and separation/divorce CGT and separation/divorce
06/03/2015
Ensuring that transactions are correctly structured where there is a planned separation or divorce can significantly reduce the amount of CGT. In this article we look at how separation and divorce affects CGT and how to ensure transfers are tax efficient keep reading

Follow on questions on PPR relief - USERNAME: massky - 25/02/2015
Tax Question: Thank for replaying to my first post, I have additional questions related to ask you regarding my first post. Q: 1a] I am allowed to rent my PPR in UK while being absent working overseas and would that still counts as my PPR in UK ? A: 1a] The property needs to be occupied as a residence for it to qualify for the deemed periods of occupation. If it was let strictly speaking it wouldn't be available for occupation as a residence. Therefore my initial view would be that the deemed period of occupation in S223[3][b] wouldn't apply. Note however that from April 2015 in order for a UK property to be your main residence you would need to either be UK resident or present in the UK for at least 90 nights. Q: 1b] UK property were I reside, it's my residence since I acquire it, and this is only property I have, it was never let before. It will be let ONLY if I take up employment overseas. When I return home to UK from working overseas, it will be my residence again. Would S223 [3] [b] apply to this ? A: 1b? -------------- Q: 2a] My wife and child will remain in UK but re-locate to another part of city close to her family and rent a flat there. Would this jeopadrise my PPR even I am solo owner of my PPR ? A: 2a] You and your wife would both need to have the same PPR relief if you are not separated. Q: 2b] Separating from wife, is it suffice ? Do you need to get divorced lawfully? A: 2b ? -------------- Q: 3a] At employment overseas, does employer have to pay for my accommodation to not jeopardise my PPR in UK ? I am allowed to rent a flat, or share a flat while working overseas ? A: 3a] If you acquire any kind of tenancy or interest in a property whilst living there, it would be classed as a residence and the deemed period of occupation wouldn't apply to the UK property. Therefore you'd need to occupy under a licence. Q: 3b] Occupying under a licence, are you saying that only employer who you work for overseas have to pay for your accommodation, or tenancy agreement have to be in employers name ? A: 3b? keep reading

PPR relief on UK property if I move overseas - USERNAME: Massky - 23/02/2015
Tax Question: Hi All, I'll appreciate if someone can help here as I find it difficult to understand given this situation. I reside in my only PPR with my wife and child, I am the sole owner of my PPR. I am interested taking up this job position overseas for considerable time. My wife and child will remain in London as she works as Dentist and would not like to lose here job and could not join me overseas. While taking employment overseas, I will be renting my PPR in London, and will return to London only for short trips to see my wife and child, or maybe 10 days for Xmas and N.Y Questions: 1] I am allowed to rent my PPR in UK while being absent working overseas and would that still counts as my PPR in UK ? 1] My wife and child will remain in UK but re-locate to another part of city [close to her family] and rent a flat there. Would this jeopardise my PPR even I am solo owner of my PPR ? 2] At employment overseas, does employer have to pay for my accommodation to not jeopardise my PPR in UK ? I am allowed to rent a flat, or share a flat while working overseas ? TCGA92/S223 [3] [b] explain this very well, but I am unsure of all rules applied in given situation. Any helps keep reading

Examples showing how to establish non residence and still qualify for PPR relief Examples showing how to establish non residence and still qualify for PPR relief
11/02/2015
In this Practitioners Zone article we run through a couple of examples showing when and how an individual can retain non residence as well as still retaining an entitlement to PPR relief on a UK property keep reading

PPR relief on a foreign property - USERNAME: regaziz - 10/02/2015
Tax Question: A person originally from the Middleast. Came to UK in 2000 and he's been British Citizen since 2003. He has a property in the middle east which was his main residence for 20 years until he left in 2000 and it's been empty since then. He is thinking of selling it and bringing the money to UK. Is he liable to any Capital Gain or other taxes? If he is liable, will he be entitled to any relief or allowances? Many thanks keep reading

Occupying trust property as main residence and PPR claim/Pro forma claim - USERNAME: PSG1 - 03/02/2015
Tax Question: A residential property comprised in a settlement has been distributed to a beneficiary [the settlor] using discretionary powers available within the trust deed. As far as CGT is concerned, as there was no claim for Holdover Relief when the property was transferred into the trust, the property qualifies as the Main Residence and relief should be available to the trustees so that no Capital Gains Tax is payable on the transfer of the property from the trust. My understanding is that unlike the case for individuals, trustees must claim Main Residence Relief under s225 TCGA 1992. So for the Relief to be effective there must be a joint claim made in writing by the trustees and the beneficiary entitled to occupy the residence. In other words, a formal claim must be made to HMRC. My question is- do you have suitable wording which could be used for this claim in these circumstances please? Given that neither the Trust nor the beneficiary file tax returns can this simply be lodged in the form of a letter to HMRC or will the Trust need to be registered under SA and a return submitted for the tax year in which the transfer took place? keep reading

Selling Australian property and reducing CGT - USERNAME: Lopsy - 15/01/2015
Tax Question: I have a rental property in Australia that I have been the sole owner of for 16 years and jointly own a property here in the UK, which I live in with my partner. I was born in the uk, but lived most of my life in Australia. I only lived in the investment property for one year. I came to the uk in 2002, returned to Australia in late 2010, and returned to live in the UK in April 2013. i have a struggling business, so my UK income is low. I want to sell my Australian property to avoid the complexities of double tax returns, because the Australian GST discount for non-residents has stopped, and, ideally, to buy investment property in the UK. Will I be liable for CGT in both countries? If I reduce my Australian CGT bill by making a voluntary payment to my australian superannuation scheme, would that influence my UK tax bill? Thanks. keep reading

Lettings relief on property - USERNAME: V V G - 14/01/2015
Tax Question: Hi Is letting relief available on sale of rented property where the owner has not ever lived in the property thanks keep reading

New PPR relief rules from 2015 - a review of the draft legislation New PPR relief rules from 2015 - a review of the draft legislation
14/01/2015
In this Gold members article we look at the new Principal Private Residence (PPR) relief rules that apply from April 2015 for both UK residents and non-residents and how they relate to the Statutory Residence Test. keep reading

How to establish a property as a main residence in 2014/2015 How to establish a property as a main residence in 2014/2015
19/12/2014
In this article we take a look at a fairly recent decision of the tax tribunal that dealt whether a property was occupied as a main residence. We look at the decision making process and key issues identified by the tax tribunal keep reading

How the new CGT rules for non-residents changes PPR relief for everyone from April 2015 How the new CGT rules for non-residents changes PPR relief for everyone from April 2015
10/12/2014
The new CGT rules for non-residents from April 2015 represent a significant change to the tax position of non-residents. However, the rules also impact on UK residents insofar as they are looking to claim Principal Private Residence ('PPR') relief. keep reading

Capital gains tax on a barn conversion including maximising PPR relief - USERNAME: SDS67 - 21/11/2014

Tax Question: I bought my house in June 1999. It is a large house and includes a barn for which I have obtained planning permission to convert it to a 2 bedroom detached house. My house has 7 acres of land. Our plan is to develop the barn and to live in it as our main residence. We also want to split the land and have 2 acres with the new property (barn conversion). We'll then sell our old house and live in the new barn conversion. Alternatively we may rent out our old house if we can't sell. How will our tax liability (capital gains tax?) be calculated if we sell the barn conversion in the future? keep reading

Deemed period of occupation for PPR relief if employed overseas - USERNAME: PROBERT1 - 13/10/2014
Tax Question: Whilst non UK tax resident we bought an apartment in the UK in December 2000. We lived in it for about a month in 2001, total time in UK in that year. I then took up another overseas role, not returning until July 2013. At that stage we stayed in the property for a few days before moving into was to be our 'family home' acquired in June 2013. In March of 2014 we sold the property. Am trying to check what relief I can get on the CGT due for any deemed periods of residence... Any advice please? keep reading

Follow-up on property business tax - USERNAME:dnjones - 25/09/2014
Tax Question: Following on from your reply to my previous property business question, can you clarify for me a point regarding the new HMRC provisions on second homes, starting from tax year 2015/16. To my understanding, the new provisions will de-exempt non-dom/non-res persons from CGT on second homes in the UK, but only for gains accruing after 5th April 2015. Am I correct there? Regarding the properties which were the subject of my previous enquiry, do they count as second homes if they are rented out as a property investment activity? If the answer is "yes" (i.e. not exempt from CGT), then is it possible for me to nominate any one of my properties (even if rented out) as my PPR once resident (as from my return to the UK) then sell free of CGT? Does one actually have to occupy a property to claim it as a PPR? keep reading

More Headlines More Headlines