PPR relief 18 months
PPR relief 18 months – Introduction
PPR (Principal Private Residence) relief is a valuable Capital Gains Tax (CGT) relief.
For our full guide on PPR relief then please visit here.
When is PPR relief available?
It is potentially available in relation to both:
- Periods of actual occupation; and
- Periods of ‘deemed occupation’– in other words, although you didn’t live there, the statute allows us to pretend you did.
This latter remains dependent on the fact that the property was a main residence or was subject to a private residence relief election under TCGA 1992, s222.
The ‘reliefs’ that are available that provide for such periods of ‘deemed occupation’ can be split in to two main categories:
- ALL cases– these apply in any case where the property has been a main residence; and
- Sandwich reliefs– these only apply where the property was occupied before and after the relevant period of absence
PPR relief 18 months – All cases
In any case where the property has been occupied as a main residence (at any time) then the final 18 months of ownership will be exempt.
Where we are talking about any tax year up to 5 April 2014, then this period is 3 years.
That old 3-year limit still applies where an individual is disabled or a long-term resident of a care home and does not have an interest in any other private residence. This may also apply to the spouse or civil partner of such a person.
Where the property is let to a tenant then Letting Relief may also be in point.
18 months to become 9 months?
Budget 2018 set out a number of changes to PPR relief including that the final period exemption will be reduced from the current 18 months to 9 months.
This represents a significant reduction for the longstanding 36 months which applied up to tax year 2013/14.
It should be noted that the special rules allowing 36 months relief for the disabled and those in a care home will not change
This measure, and the proposed changes to Lettings Relief, were under Consultation (now closed)
Finance Bill 2019/20 confirmed that the reduction from 18 months to 9 months will take place.
As seen above, PPR relief is an attractive CGT relief and the 18-month‘period of grace’ is doubly so.
However, the Government and HMRC have decided that these tax reliefs are too generous and have made recent and ongoing attempts to narrow the availability of these reliefs.
Further, we see further challenges by HMRC in the Tribunals against, what they see, is speculative claims for these reliefs.
If you have any queries about PPR relief 18 months or about private residence relief at all then please get in touch.
PPR relief 18 months was last updated on 29 July 2019