HMRC toughens stance on landlords claiming CGT relief

publication date: Apr 24, 2013

HMRC toughens stance on landlords claiming CGT relief


HM Revenue and Customs (HMRC) is taking a toughened stance against what it sees as contentious tax relief claims from landlords, as demonstrated by a recent tax tribunal case.


The case involved a buy-to-let owner who had claimed that one of her letting properties was her main home in order to claim capital gains tax (CGT) relief.


The woman claimed principle residence relief (PRR) after she sold a buy-to-let house she had temporarily moved into after separating from her husband. The property was sold after she moved into a second buy-to-let home.


According to the woman, the separation was temporary and she remained on good terms with her husband, regularly returning to the marital home and continuing to receive post there. However, she did not close a joint bank account and failed to change utility bills at either of the buy-to-lets she lived in into her name.


HMRC argued that the woman’s main home was still her marital home and she was therefore not entitled to claim PRR on the sale of the buy-to-let. The First-Tier Tribunal, sitting in Cambridge, agreed with HMRC, rejecting the woman’s claim and ordering her to pay the full amount of CGT due on the sale.


Under tax law, a married couple must have only one main home for PRR relief. The tribunal felt that the woman had only moved into the buy-to-lets on a temporary basis, so was therefore not entitled to claim the CGT relief.


This article is a guest article brought you by Richard Grayson, Managing Partner at Nicholsons.


Nicholsons is an experienced property tax specialist who can advise you on your tax obligations to HMRC, whatever your circumstances.  


For help with your property tax, visit our Buy to Let checklist or contact us.

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