Ppr

I heard today that you can have two 'principle private residences' if one is in england & one in scotland. I've never heard of this before and the person who I was speaking to is definately no expert in such matters but I'm curious to know if there's any truth in this at all. Does anyone know?

Comments

  • reader
    reader MAAT, AAT Licensed Accountant Posts: 1,037
    JodieR wrote: »
    I heard today that you can have two 'principle private residences' if one is in england & one in scotland. I've never heard of this before and the person who I was speaking to is definately no expert in such matters but I'm curious to know if there's any truth in this at all. Does anyone know?

    I'm no expert either but according to HMRC's helpsheet:
    "If you live in, as your home, two or more houses, you can only have one main residence at a time for Private Residence Relief. You can nominate which residence is to be treated as your main residence for any period."

    I also did a search for the word "Scotland" in the help sheet and it came up with no results.

    Therefore I would conclude that you can't have 2 PPR's.
  • jamesm96
    jamesm96 Registered Posts: 523
    I must admit I've never heard of any kind of dual-PPR; as a UK resident you'll pay UK tax on your worldwide income (including worldwide gains) so I can't see why there'd be a relief simply because the property is in a different bit of the UK.
  • JodieR
    JodieR Registered Posts: 1,002
    Thanks, I thought it was odd i'd never come accross this before... I've not idea where he got this idea from but his friend has built himself a holiday home in Scotland based on this information and now thinks that there'll be no CGT to pay on it and I think he's extending this to not needing to declare rental income on it either... I'm NOT getting involved with that one!!
  • jamesm96
    jamesm96 Registered Posts: 523
    I mean, if he makes less than £10,600 on the capital gain then he'll still get away with no CGT, but still no help on the rental income.
  • JodieR
    JodieR Registered Posts: 1,002
    jamesm96 wrote: »
    I mean, if he makes less than £10,600 on the capital gain then he'll still get away with no CGT, but still no help on the rental income.

    Yeah, but he's built it himself and by the sounds of it it's of mansion proportions. He's not my client so I'm not worrying about it at all, I was just baffled to hear that he thought he could have two PPRs.
  • jamesm96
    jamesm96 Registered Posts: 523
    JodieR wrote: »
    Yeah, but he's built it himself and by the sounds of it it's of mansion proportions. He's not my client so I'm not worrying about it at all, I was just baffled to hear that he thought he could have two PPRs.

    Yeah fair enough, and you're right. The clue is in the first 'P'!
  • reader
    reader MAAT, AAT Licensed Accountant Posts: 1,037
    JodieR wrote: »
    I was just baffled to hear that he thought he could have two PPRs.

    Technically I think he could have two properties qualifying for PPRR simultaneously if, for example, he makes an election under S.222(5) TCGA 1992 for the Scotland mansion to be his PPR and then sells the first property before 36 months have passed.

    This would give rise to 2 PPRs as the Scotland mansion would be his PPR (by virtue of the election) and the first property would qualify for PPRR as the last 36 months of any property that has been a PPR qualifies for PPRR. A neat bit of CGT planning.

    Similarly, after making the PPR election on the Scotland mansion, if he decides to go back to the first property the last 36 months of the Scotland mansion would qualify for PPRR as it had been a PPR at some point in time (as a result of the election under S.222(5) TCGA 1992) and the first property would still qualify for PPR as you are allowed PPRR for 3 years for any reason.
  • stevo5678
    stevo5678 Registered Posts: 325
    Hi reader, i agree but HMRC have the power to come at it from an income tax angle IE as a trade. If the person is doing it all within 3 years then there is clearly a profit motive. I'm not saying it's definitely the case but it will be an argument available to HMRC (if it was ever challenged).
  • JodieR
    JodieR Registered Posts: 1,002
    I agree with what reader's said there and I was aware of that rule, but in that case it wouldn't make a difference if the property was in England or Scotland, would it?
    As he lives happily with his wife and kids and job in Newcastle I can't see him convincing HMRC that the scottish property was ever his main home, and he's not planning on selling it in the foreseeable future, so although it's a valid point I don't think that that was the angle he was coming at it from.
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    The sad thing is if he never declares the sale of the Scottish property, the chances are HMRC will never know.
  • reader
    reader MAAT, AAT Licensed Accountant Posts: 1,037
    JodieR wrote: »
    it wouldn't make a difference if the property was in England or Scotland, would it?

    As he lives happily with his wife and kids and job in Newcastle I can't see him convincing HMRC that the scottish property was ever his main home

    Re: England and Scotland, no, I don't think it makes a difference.

    Re: Scottish property never being his PPR, then in this case he wouldn't be able to make the election to make the Scottish residence his PPR and therefore the whole thing falls apart because if he can't make this election he can't get two lots of PPRR.
  • JodieR
    JodieR Registered Posts: 1,002
    Monsoon wrote: »
    The sad thing is if he never declares the sale of the Scottish property, the chances are HMRC will never know.

    until they do a crack-down campaign on this sector and see the property advertised through agents and all over the internet!
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    JodieR wrote: »
    until they do a crack-down campaign on this sector and see the property advertised through agents and all over the internet!

    Key word: until.

    For now....... :rolleyes:

    Maybe this is the loophole to which the guy initially referred? :lol:
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