Legislation does not define exactly what constitutes a ‘residence’ but in the tax case of Batey v Wakefield (1981) it was decided that not only can the main residence comprise more than one building but it can also include ancillary buildings that are used as houses in their own right (e.g. summerhouse, staff bungalow).
In the subsequent case of Williams v Merrylees (1987) the judge went further stating that ‘what one is looking for is an entity which can be sensibly described as being a dwelling-house though split up into different buildings performing different functions’.
Residence – Williams v Merrylees (1987)
A taxpayer purchased a small estate including a lodge sited approximately 200 metres from the main house. The lodge was occupied by a married couple who worked on the estate. The taxpayer sold the main house but retained the lodge after he moved.
When the occupants of the lodge died the taxpayer sold the lodge to the purchasers of the main house.
The commissioners found that the lodge was in the area of the main house and allowed the PPR relief claim.
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