Principal private residence (PPR) relief meaning

See Q&A: If a person has owned and lived in a property as their primary home for the entire time they held it, can principal private residence relief apply to the gain when that property is split into two self-contained flats and each flat is subsequently sold to different purchasers?...

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See Q&A: What are the tax implications of parents selling their main residence at an undervalue to their son? When parents transfer their main home to their son for less than market value, several tax consequences may need to be weighed up. These span: capital gains tax (CGT) inheritance tax (IHT) potential pre-owned asset charges (POAT) stamp duty land tax (SDLT) For CGT specifically, a disposal of a principal residence is ordinarily covered by principal private residence relief under section 222 of the Taxation of Chargeable Gains Act 1992. Provided the property has been the sellers’ only or main residence for the whole period they have owned it, the gain is generally exempt, so no CGT arises on the sale at an undervalue...

CGT reliefs most relevant to Private Client Multiple reliefs exist to lessen or defer capital gains tax (CGT) arising on the disposals of both business and personal interests...

Principal private residence relief Where an individual holds more than one residence, they may, by formally giving notice to HMRC, nominate which property is to be treated as their main residence for principal private residence (PPR) relief purposes. In these circumstances, any period of actual ownership (by election) of the elected PPR should be regarded as fully exempt from capital gains tax (CGT), provided there has been a previous period of actual occupation. In addition, the last nine months of the period of ownership are always deemed to be a period of occupation. Before 6 April 2014, the exemption covered the final 36 months of ownership; it was reduced to 18 months from 6 April 2014, and halved again to nine months for disposals on or after 6 April 2020. Individuals who are disabled or residing in a care home, and who have no other property on which PPR relief can be claimed, continue to benefit from the 36‑month final period exemption...

This Practice Note sets out key tax pitfalls and planning opportunities for individuals departing the UK. It is a brief overview, and bespoke advice may be necessary for particular clients, especially where circumstances are complex. —key points to consider A tax-efficient exit from the UK demands thorough planning. Points to review include: the statutory residence test (SRT) temporary non-residence disposal of UK residential property domicile status double taxation compliance obligations UK pensions and investments residence of trusts and companies where taxpayer is a trustee/director/officer continuing tax obligations post-departure These matters can be depicted in the following diagram: Statutory residence test For anyone aiming to be non-UK resident after 5 April 2013, the statutory residence test (SRT) determines how many days may be spent in the UK without being treated as UK-resident. For information on the SRT, see the following Practice Notes: Residence after 5 April 2013 The statutory...

HM Revenue and Customs [ Insert HMRC address ] [ insert date ] Dear [ insert organisation/department name ] We hereby give notice of a joint nomination that the property listed be deemed the main residence of [ insert individual beneficiary’s name ] with effect from [ insert date ] for principal private residence relief under Sections 222–226 TCGA 1992: [ Insert full address of beneficiary’s principal residence ] The property is held on trust and registered in the trustees’ names, as trustees of the [ insert name of trust ]. Under the [ insert name of trust ], [ insert individual beneficiary’s name ] has a right of occupation. This nomination is made within two years of [ insert individual beneficiary’s name ]’s residence mix changing, the latest change being [ insert text ]. [ This nomination replaces the prior nomination made on [ insert date of the most recent previous election ] from [ insert date from which this election is...

HM Revenue and Customs [ Enter HMRC address ] [ Enter date ] Dear [ enter organisation/department name ] I am writing to inform you of my nomination that the property detailed below is to be regarded as my main residence with effect from [ enter date ] for the purposes of capital gains tax principal private residence relief under Section 222(5) of the Taxation of Chargeable Gains Act 1992: [ Enter principal residence address ] This nomination is submitted within two years of an alteration to the mix of my dwellings, the latest such change being [ enter text ]. [ This nomination supersedes the earlier nomination dated [ enter date of the most recent previous nomination ] and takes effect from [ enter date from which this nomination is to apply ]. ] This letter has been executed by all registered proprietors of the property. Signed: .........................................................

For this Q&A, it is taken that the property serves as the principal private residence of the life tenant within the trust arrangement. Principal private residence relief The trustees and the life tenant alike might qualify to claim principal private residence (PPR) relief on gains realised from the eventual sale of the property concerned...