PPR and lettings relief

Monsoon

With reference to http://www.hmrc.gov.uk/helpsheets/HS283.pdf

If someone fulfils the following criteria and gets PPR:

"Job-related accommodation
If you live in accommodation that is job-related and you also own a dwelling house that you intend to occupy as your only or main residence, the dwelling house you intend to occupy is treated as actually being occupied by you as a residence during the period in which you intend to occupy it, even if you never actually live there. This means that you may nominate that residence as your only or main residence and get relief on the whole or a part of the gain. Please see the paragraph headed ‘Only or main residence’ on page 3. If your intention to live in the dwelling house ends, then the dwelling house is no longer treated as your residence. Accommodation is job-related if it is exempt from Income Tax for the reasons set out in Helpsheet 202 Living accommodation."

And they fulfil the following criteria and get PPR:

"However, you will be entitled to full relief where all the following
conditions are met:
• the dwelling house has been your only or main residence throughout your
period of ownership, and
• you have not been absent, other than for an allowed period of absence or
because you have been living in job-related accommodation, during your
period of ownership
• the garden or grounds including the buildings on them are not greater than
the permitted area, and
• no part of your home has been used exclusively for business purposes
during your period of ownership."

My question:

If they let that property out while they were living in job related accommodation, does the gain still have to be apportioned for the let period as you would with a normal house where you live in it a bit and let it a bit? Or do the above rules trump the letting rules?

I can't work out whether it does or not.

The two paragraphs quoted seem to say that they can have PPR, let or not.

Hollysan

Hello Monsoon,

This is tricky, but I don't think that letting the house out for part of the time would stop the client being eligible for PPR, as it's not a full-time business and they seem to fulfil all the criteria; I would have thought they could claim the PPR but then of course they would be liable to income tax for the rental income. I would check with HMRC though.

Hollysan

Jmann

Monsoon wrote: »

If they let that property out while they were living in job related accommodation, does the gain still have to be apportioned for the let period as you would with a normal house where you live in it a bit and let it a bit? Or do the above rules trump the letting rules?

You need to first decide deemed and actual occupation. Job related accommodation period is deemed occupation, hence it overrides let period. However, I need to check whether you require a "sandwich" in order to get job related accommodation.

Monsoon

Thanks

The job related accomodation is a definite, it qualifies. There was no actual occupation (but deemed occupation applies, it's fine, I'm 100% on that bit).

If "Job related accommodation period is deemed occupation, hence it overrides let period" is correct, this is what I'm looking for

Jmann

Monsoon wrote: »

Thanks

The job related accomodation is a definite, it qualifies. There was no actual occupation (but deemed occupation applies, it's fine, I'm 100% on that bit).

If "Job related accommodation period is deemed occupation, hence it overrides let period" is correct, this is what I'm looking for

It definitely overrides, as deemed occupation gets priority over lettings relief. Same apply to last 3 years (36 months) always deemed occupation, even though part of that period (from last 3 years) was let period.

John

Monsoon

Fabulous, thank you very much

deanshepherd

Jmann wrote: »

Same apply to last 3 years (36 months) always deemed occupation, even though part of that period (from last 3 years) was let period.

I agree with the above but, as an aside, there is actually some contention over the last 36 months that has not yet been tested in the courts.

According to certain tax commentators you can claim both deemed occupation and lettings relief for those last 3 years where you have chargeable periods to expunge.

I have done this once where the tax saved was significant. Otherwise I would generally advise against as HMRC do not share that same interpretation.