Private residence relief quality of occupation


Andy Wood

Andy is a practical, creative tax adviser who assists a variety of clients in achieving their personal and commercial objectives in the most tax efficient manner.

Private residence relief quality of occupation

Introduction – private residence relief quality of occupation

Private residence relief is clearly a valuable relief. Certainly, where someone has benefitted from growth in the property market the ability to fully exempt a gain whilst they have occupied the property throughout ownership is an attractive proposition.

However, it is also the ability to obtain relief for periods of ‘deemed occupation’ that may lead some taxpayers to ‘game the system’ and attempt to claim private residence relief for properties which perhaps are investment properties – either by making an invalid TCGA 1992, s222 election or by simply claiming the relief on disposal. Surely not?

In both cases, where disputed by HMRC, the taxpayer will be required to show that the quality of their occupation was sufficient for it to be considered their residence.

Note the word ‘quality’ and not ‘quantity’.

Bright line rules – private residence relief quality of occupation

What tests do the Tribunals apply when assessing whether a property has been occupied as a residence or not?

There is no hard and fast answer or definition. However, there are a number of bright line rules which must be considered in the round which are listed below.

In addition, there must be supporting evidence. Much of the case law turns on the evidence provided, or otherwise, by the taxpayer.

Intention: There must have been an intention to occupy the property as your home;

Address of record: Is the property used as the address of record for various bills and government bodies – for example, bank statements, utility bills, voting register, council tax etc;

Length of occupation: long and continuous occupation of the property is helpful. Occasional and ad hoc visits to the property is likely to point to this not being occupied as a residence.

Earlier conversations with HMRC: if you have said that you had not made up your mind whether a new property or another property was your main residence then the Tribunal is likely to use that as evidence that it is not occupied as a residence

Private Residence quality of occupation – indicative factors

We will now set out some of the factors that are:

  • Indicative of occupation; and
  • Indicative of non-occupation

Factors indicative of occupation as main residence

Income not generated from property sales

Your income is entirely unrelated to the proceeds received on the disposal of properties

Property used as an address for correspondence

You use this address as the registered address in connection with HMRC, driving licence, utility bills and banks

No Council tax discount

You are not receiving a ‘second home’ or ‘empty home’ discount from council tax in respect of the property

Family live with you at the property

Where applicable, your family reside with you at the property rather than at another property of yours.

Utility services

All of the utility services are connected and the usage of these services – evidenced by your bills – shows that the property is being used as a residence.

Marketing of the property

The property was occupied as a main residence before it was put on the market with estate agents.

Factors indicative not occupied as main residence

Income from property sales

Where one receives the majority of their income from selling properties then this might point towards the fact that the property was not occupied as a main residence.

Postal address

If you use an alternative property as the registered address in connection with HMRC, driving licence, utility bills and banks then this is likely to be indicative that it is not your main residence.

Council tax discount has been claimed

A Tribunal is likely to be persuaded that the property was not occupied as a main residence by HMRC if one has applied for an ‘empty home’ discount.


Of course, families can be quite complex these days. However, in the absence of other reasons, if all of the rest of your family live in another property throughout the week and you are claiming to live in a different property then this might point to the fact that the other property is really your residence.

Utility services

Where either the mains are not fully connected or their usage is minimal then this is likely to point towards the conclusion that this is not occupied as a main residence. 

Marketing of the property

Where a property is put on the market before moving in to the property or before an intention to live in as the residence then this may be indicative of the property not being a residence.

Conclusion – private residence relief quality of occupation

Where there is a dispute over the ‘quality of occupation’ one will need to evidence:

  • A degree of permanence;
  • A degree of continuity; or
  • the expectation of continuity

If not then a property will not constitute a ‘residence’ for the purposes of CGT private residence relief.


If you have any queries on private residence relief quality of occupation or any other property tax matters then please do not hesitate to get in touch.


Private residence relief quality of occupation was last updated on 16 September 2018

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