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Where Taxpayers and Advisers Meet

UK Non-Resident Eligibility to Claim Full PRR on UK Property Sale

ashleyc2783
Posts:2
Joined:Thu Apr 05, 2012 10:01 am
UK Non-Resident Eligibility to Claim Full PRR on UK Property Sale

Postby ashleyc2783 » Sun Apr 18, 2021 8:30 pm

I purchased a UK residential property in May 2013 for £345k that I lived in (primary residence) from the purchase date. An extension costing £50k was completed in Summer 2014. In June 2017 when I relocated to Isle of Man for work (full time employment). Since September 2017 the UK property has been let to tenants and I have been paying UK tax as a non-resident landlord on the rental income.

I am now looking to sell the UK property as I have been renting in Isle of Man and because I am now settled here wish to sell my UK property to allow me to purchase in the Isle of Man. An initial valuation has been done suggesting a sale price of £650k. My understanding is that the base cost of the property is £345k purchase price, plus £50k extension = £395k, which would result in a capital gain of £255k.

I am uncertain if I will be able to obtain full relief on this capital gain from Private Residence Relief; or only partial.

From this manual(https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief):

However, you will be entitled to full relief 1 where all the following conditions are met:
1. the ‘dwelling house’ has been your ‘only’ or ‘main residence’ throughout your ‘period of ownership’
2. 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’
3. the ‘garden or grounds’ including the buildings on them are not greater than the ‘permitted area’
4. no part of your home has been used exclusively for business purposes during your period of ownership


I believe that my period of working in Isle of Man fully qualifies as a period of allowed absence. However I have seen some references to changes from 2015 changing what qualifies as an individual’s main residence, for example (https://www.bdo.co.uk/en-gb/insights/tax/private-client/private-residence-relief-from-capital-gains-tax)

As a result of the introduction of CGT for non-residents on the disposal of residential property, the PRR rules were amended with effect from 6 April 2015. The changes affect UK-resident individuals as well as overseas residents.
The PRR rules were amended so that a property may only be treated as an individual’s main residence for a tax year where the person or spouse has either been tax resident in the same country as the property for that tax year, or stayed overnight in the property at least 90 times in that tax year. The new rules apply to a UK resident individual disposing of an overseas residence just as they do to a non-UK resident disposing of a UK residence.


Under this condition myself or my spouse has not stayed in the property 90 times in any year tax year since moving to the Isle of Man.
Would we be eligible for full relief on the capital gain? If not, partial relief? What would the taxable gain be, based on these facts?

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: UK Non-Resident Eligibility to Claim Full PRR on UK Property Sale

Postby maths » Mon Apr 19, 2021 3:34 pm

There are 3 (somewhat complicated) ways to compute a non-resident CGT charge on a sale of UK residential property each giving a different answer.

The MV as at 6.4.15 is important.

Without doing the calculations I suspect the default basis of calculation, ie rebase as at 6.4.15, may not be there best option.


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