Author: Helena Luckhurst
This article is taken from Helena Luckhurst’s blog The Wealth Lawyer UK
The Chancellor’s Autumn Statement last month confirmed that capital gains tax (CGT) is to be extended to UK residential property owned by non-residents. At the time of writing this, we are still waiting for further details in the form of a consultation document. However, I predict that securing CGT Principal Private Residence (PPR) Relief will become a popular topic of discussion in 2014 for those non-residents who do use a UK property as a residence. There may be no downside in their electing for the UK residence to qualify for PPR Relief, if they can.
Even for UK residents, PPR Relief should be of immense interest because it is one of the most valuable reliefs that most people are likely to take advantage of in their lifetimes. In short, it allows people to sell their homes and not have to pay CGT on the growth accrued during their period of ownership. So in times of rising house prices, it pays to ensure that your PPR Relief claim is rock solid.
Fortunately there is usually plenty of caselaw to give food for thought and 2013 was no exception. Unfortunately we are nowhere near being able to predict the availability of PPR Relief with certainty in every situation but there seems to be a theme emerging of the importance of a person’s intention at the time of starting to occupy the property. The intention has to be to occupy with a sufficient degree of permanence (whatever that equates to) so that the property constitutes a residence. If this is present, PPR Relief is more likely to be granted, even if the actual occupation of the property is for a relatively short period (just ask the lovelorn Mr Morgan: Morgan v HMRC  UKFTT 181 (TC)).
Two more recent 2013 cases on PPR Relief also deserve your attention:
Helena Luckhurst, Partner, Fladgate LLP (firstname.lastname@example.org)