Private Residence Relief and deemed occupation

Property Jul 18, 2023

If you sell a property that was your main residence at some point during your ownership, you may be eligible for private residence relief (PRR) which can reduce or eliminate your capital gains tax liability. However, there may be periods when you were not living in the property, such as when you moved out before selling it, or when you let it out to tenants. In this blog post, we will explain how you can claim PRR for periods of non-occupation and what conditions you need to meet.

The basic rule is that you can claim PRR for the period of your actual occupation, plus the last 9 months of ownership, regardless of whether you were living there or not. This is to allow for some flexibility in case you have difficulties selling your property or buying a new one. However, there are additional reliefs that can extend the PRR period beyond the 9 months. Previously that period of 9 months was 36 months. You could also claim letting relief if you had rented the property during a certain period. Those benefits have been curtailed now but you still can claim relief in some cases where you did not occupy the property. It's called deemed occupation and here are the different scenarii where it's available.

Final period of ownership

That's the one we just talked about, and it is the most common scenario where relief is available despite not being in occupation of a property. Since April 2020, the final period is nine months and those are always available if you have lived in the property as some point (to exclude the buy-to-let properties where no such relief is available). The intention of the exemption is to aid sellers who are having difficulties finding a buyer. This is regardless of having difficulties finding a buyer or the use of the property during that period.

Delayed occupation

Another scenario where a period of non-occupation will be treated as a period of occupation is where there is a delay in taking up residence of a dwelling. The following conditions must be satisfied:

  • occupation of the property happens within two years of purchase;
  • the property was not another person’s residence during the period of non-occupation; and
  • a qualifying event happens during that period of non-occupation. A qualifying event can be a delay due to the completion of construction, renovation, redecoration of the property, or because the individual can't move in until he disposes of his previous residence.

Period of absence up to 3 years for any reason

Any period of non-occupation for any reason of up to 3 years can be claimed as deemed occupation as long as there is a period of actual occupation both before and after the period of absence.

Period of absence due to work outside the UK

Where an individual works in an employment outside of the UK, a period of absence of any length will be treated as a deemed occupation. The relief also extends to an individual who lives with a spouse who has an office or employment overseas. While holidays in the UK can be ignored, one should be careful not to work UK during that period even occasionally. Where an individual is prevented from returning to a property because of their employer requiring them to reside elsewhere, the requirement to occupy the property after the period of absence is relaxed.

Period of absence up to 4 years due to work in the UK

Finally, if an individual is prevented from residing in a property due to working elsewhere in the UK (or because of a condition imposed by their employer requiring them to reside elsewhere) a period of absence not exceeding four years will be treated as a period of deemed occupation. Again, the requirement to occupy the property after a spell of UK working is relaxed if the individual is prevented from doing so by reason of their employment.

It is important to note that the periods of absence are cumulative and can be applied in the way which is most beneficial to the taxpayer. Claiming periods of absence in a PPR claim can help you save a lot of money on CGT when you sell your home. However, you must make sure that you meet the conditions and keep records of your absences and their reasons. If you are unsure about how to claim periods of absence in a PPR claim, it is advisable to seek professional advice from a tax expert.


Franck Sidon

With over 15 years of experience as a Managing Director at TaxAssist Accountants, I have helped thousands of businesses and individuals achieve their financial goals and optimize their tax efficiency.