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Where Taxpayers and Advisers Meet

PPR extended relief

Brightonian
Posts: 99
Joined: Wed Aug 06, 2008 3:31 pm

PPR extended relief

Postby Brightonian » Mon Nov 07, 2011 3:41 pm

I have an interesting situation. My clients are husband and wife. H has let out for years a property which was once his PPR and was in his sole name. He was thinking of selling so I suggested that he transfer a 50% share to W before sale. He did this in March 2010 and continued to let the property out until June 2010, when it became vacant until sale a year later. The small rental income for 2010/11 will be shown on both their 2011 tax returns.

In working out the CGT, H will be entirtled to PPR relief for his period of occupation as well as the final 36 months of occupation. As he let the property out for some years, he will also be entitled to the full £40,000 extended relief under s.223(4).

My question is - is W entitled to any relief under S.223(4). She will get the same PPR as him but will she get any extended relief? I assume that, at the very least, she will get 3 months' worth for the period March - June 2010. But could she qualify for the full £40k, the same as H?
I'd be interested to hear what others think.

maths
Posts: 7599
Joined: Wed Aug 06, 2008 3:25 pm

Re: PPR extended relief

Postby maths » Mon Nov 07, 2011 4:40 pm

My question is - is W entitled to any relief under S.223(4). She will get the same PPR as him but will she get any extended relief? I assume that, at the very least, she will get 3 months' worth for the period March - June 2010. But could she qualify for the full £40k, the same as H?
At the time of transfer from H to W the property was not the only or main residence of H.

As a consequence there is no "back-dating" effect for W ie she is entitled to no PPR relief as it has never de facto been here PPR.

She is also entitled to no "lettings relief'.

Brightonian
Posts: 99
Joined: Wed Aug 06, 2008 3:31 pm

Re: PPR extended relief

Postby Brightonian » Mon Nov 07, 2011 4:57 pm

Thanky ou for replying, Maths, but I don't accept that no 'mainstream' PPR is due to W. S.222(7)(b) states taht on a disposal the transferee spouse can count any period of residential occupation by the transferor spouse as though it were his/her own, regardless of the true position.

I am uncertain about the position for lettings relief however.

maths
Posts: 7599
Joined: Wed Aug 06, 2008 3:25 pm

Re: PPR extended relief

Postby maths » Mon Nov 07, 2011 5:07 pm

No; at the time of the transfer the section requires that the property is the only or main residence of H.

Peter D
Posts: 10668
Joined: Wed Aug 06, 2008 3:37 pm

Re: PPR extended relief

Postby Peter D » Mon Nov 07, 2011 5:21 pm

And they are living together in the property. I hope your advice of the transfer has not cost the owner. Regards Peter

Incredulum
Posts: 2723
Joined: Thu Dec 03, 2009 5:35 pm

Re: PPR extended relief

Postby Incredulum » Mon Nov 07, 2011 5:46 pm

Are you the Maggie Flemming who writes in the Telegraph?


I agree with Maths. 222(7) (a) if the one disposes of... the dwelling-house... which IS their only or main residence to the other

It has to be their only or main residence at the exact date of transfer, otherwise it cannot be the dwelling-house which "is" their residence, it becomes the house which "was" their residence.

Brightonian
Posts: 99
Joined: Wed Aug 06, 2008 3:31 pm

Re: PPR extended relief

Postby Brightonian » Mon Nov 07, 2011 5:49 pm

Thanks to everyone who has replied. I have read the legislation and see that my understanding was incorrect. Yes, I did used to write in the Telegraph but they have now changed their property section.

Brightonian
Posts: 99
Joined: Wed Aug 06, 2008 3:31 pm

Re: PPR extended relief

Postby Brightonian » Tue Nov 08, 2011 6:09 am

I may be clutching at straws here but is there any mileage in the view that, as all proceeds of sale went to the husband and were invested in his sole name, he retained the beneficial interest throughout and the inter spouse transfer was a sham?

Peter D
Posts: 10668
Joined: Wed Aug 06, 2008 3:37 pm

Re: PPR extended relief

Postby Peter D » Tue Nov 08, 2011 8:52 am

Firstly have you run the number for any CGT if the disposal was solely in his name and again with the ownership was at disposal. How did you transfer a share to W, was this a Declaration of Trust or via the LR. Regards Peter

Brightonian
Posts: 99
Joined: Wed Aug 06, 2008 3:31 pm

Re: PPR extended relief

Postby Brightonian » Tue Nov 08, 2011 10:37 am

Thank you, Peter. I haven't run the numbers in detail as I am still waiting for some figures. But my draft indicates it would be better if the disposal were just in the husband's name. I will speak to the clients later today to find out how they effected the transfer.
Anotehr thought occurs - probably another weak straw. They were married within the last three years. Would it be possible for them to elect for the flat that has been sold to be their PPR for a period after the tenant moved out? I know it is possible to amke the election after sale but would it be regarded as a 'residence' of theirs. it was the husband's residence in
the past but stood empty between the tenant moving out and the sale.
I really appreciate your help. I have never had a situation like this in 20 years of working in tax and it si really upsetting.


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