PPR relief when working abroad if PPR changes

PPR relief when working abroad if PPR changes

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Client lived in his elected PPR in Cheshire but was then posted abroad by his Company in 2011 on an initial 4 year contract. He lived in accommodation provided and paid for by his employer whilst abroad. He rented out his PPR in UK whilst abroad. In 2013 he sold his PPR in UK and immediately (same month) purchased another house in U.K. and requested HMRC treat this as his new PPR; HMRC confirmed acceptance of the new house as his PPR in writing. He then rented out his new home in UK.

He returned to work with his Company in UK in 2016 and moved back into his PPR before selling it in 2017.

Can he claim PPR relief for the whole of the period of absence even though his PPR changed in the middle of his period of absence?

Replies (14)

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Scooby
By gainsborough
15th Aug 2019 12:48

I think the question here is whether is whether he occupied the new property as his main residence at all before renting it out, in order to meet the conditions at TCGA 1992 s223 (3).

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By anneaccountant
15th Aug 2019 13:16

He occupied the original property as his PPR before going abroad but not the new property until he returned home. Are HMRC likely to accept that the new home just replaced the original home as his PPR whilst he was abroad and allow him to carry the relief for a period of absence abroad to the new PPR?

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Replying to anneaccountant:
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By Tax Dragon
15th Aug 2019 13:20

One of the two is not "the" dwelling house in question, I would suggest.

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By Accountant A
15th Aug 2019 14:58

S223(3) TCGA says "... if both before and after the period there was a time when the dwelling-house was the individual’s only or main residence".

Does that not mean the 2013 sale doesn't attract relief?

EDIT: Didn't see gainsborough had made the point first.

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Replying to Accountant A:
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By Tax Dragon
15th Aug 2019 14:56

It wouldn't attract 'absence' relief.

But was it three years you got back then?

Any anyway the taxpayer was not resident in the UK.

There isn't a "Gum" case that means you get taxed on an exempt gain if you thought you were exempt for the wrong reason.

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Replying to Tax Dragon:
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By Accountant A
15th Aug 2019 14:59

Tax Dragon wrote:

It wouldn't attract 'absence' relief.

But was it three years you got back then?

Any anyway the taxpayer was not resident in the UK.

There isn't a "Gum" case that means you get taxed on an exempt gain if you thought you were exempt for the wrong reason.

I shouldn't try and make a useful comment without properly reading the Q.

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Scooby
By gainsborough
15th Aug 2019 15:03

Yes, last 36 months were exempt for pre-6.4.14 PPR sales and that sale was before non-UK residents were charged on residential property sales as pointed out by Tax Dragon.

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Replying to gainsborough:
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By Tax Dragon
15th Aug 2019 15:06

That's probably handy... since the non-residence may have been less than 5 years! :-)

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Replying to Tax Dragon:
Scooby
By gainsborough
15th Aug 2019 16:49

Very true :-)

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By anneaccountant
16th Aug 2019 09:26

Correct there was no CGT on the 2013 sale and he worked abroad for less than 5 years. He was based in the U.K. when he made the property sale in 2017.
I am trying to determine if he just gets PPR relief for just the last 18 months of ownership of that property or if he also gets relief on the new PPR from 2013 as part of a period of absence between 2011 and 2016 even though the PPR changed? He had lived in the original house as his PPR before going abroad and lived in the second house as his PPR before selling it in 2017. He did not live in the second house before the period of absence however my question is can the period of absence PPR relief be transferred from one PPR to another PPR if he sells and buys his main home whilst abroad? HMRC were informed of the change of PPR in 2013 and acknowledged it in writing to the client.
My understanding of the period of absence relief was that a tax payer should not be penalised on CGT for taking up a post abroad for a few years.

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Replying to anneaccountant:
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By Matrix
19th Aug 2019 14:28

How does he qualify for lettings relief if the letting predates his occupation in the house as his PPR?

Sorry this was a reply to Gainsborough.

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Scooby
By gainsborough
16th Aug 2019 11:05

My opinion is no for the reason mentioned above (fails s223 (3) as no actual occupation before). However, the last 18 months will qualify and there is also letting relief available.

An exception exists if the accommodation abroad fell into the very limited job-related accommodation criteria. In that case, intention to occupy the second property would be enough.

Finally, if the sale took place in 2017, I assume that this is for determining whether a gain should have been declared on the 2017/18 tax return?

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Scooby
By gainsborough
16th Aug 2019 11:06

Also meant to add that HMRC will acknowledge a PPR claim at the time as it is made, but will not question the validity until disposal of the property (as per their internal manuals).

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By tonyaustin
19th Aug 2019 14:24

He gets PPR up to the time he want abroad plus the last 18 months and lettings relief for the period it was let, apart from the last 18 months. This will all change from April 2020

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