Private Residence Election – update

03/12/2014

Principal Private Residence election update

We would refer you to our article back in June 2014, when we reported that the Government and HMRC were looking to withdraw this election, although contentiously this arose due to HMRC’s plans to extend Capital Gains Tax (CGT) to non- residents on the disposal of UK residential property.

A consultation process was put in place which concluded last month. Last week, the Government published its response to the consultation and confirmed a new charge to CGT will apply to non UK residents from 6 April 2015. Properties will be revalued to market value as at 5 April 2015 with an election for time apportionment or original cost.

The original consultation had considered abolishing PPR elections and using a facts-based approach to determine which property should be treated as the exempt one. Rather than totally abolishing the right to make an election, the Government now proposes that those who have a property in a different country from their country of residence will need to stay at the property for at least 90 midnights a year to qualify for the CGT exemption. This will apply to UK residents with homes abroad, as well as to non-residents with homes in the UK. Occupation by the individual’s spouse or civil partner will count towards this total.

As a result the position does not change for UK residents whose residences are only in the UK and they will continue to have the right to make an election.

If you have more than one home please contact us as soon as possible so that we can consider any planning.

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