Is your PPR relief at risk due to renovation works?

We have previously posted about Principal Private Residence (PPR) relief, which can result in an individual’s main home not being subject to capital gains tax upon disposal.

Many people purchase a property but delay moving in to undertake extensive renovation works.  As this is not an uncommon scenario there is a concession whereby, provided the period the property is unoccupied does not exceed 12 months from the purchase and they do then subsequently occupy the property as their main residence the period of inoccupation will qualify for PPR relief.

However, this becomes more complex if the delay of occupation will exceed 12 months.  HMRC guidance provides that where there are “good reasons” for the period exceeding 12 months, which were outside the individual’s control, the period treated as occupation may be extended to 24 months. What constitutes a good reason is at the discretion of the HMRC inspector and will depend on the specific facts, however it would not extend to an individual’s lack of funds.

As an example, an individual owned a property for 10 years, but did not live in it for the first two years due to renovation works and HMRC denied the extension to 24 months.  Therefore as the property was not occupied as a main residence within the permitted period (which in this example is 12 months as an extension was denied) then upon a future sale 20% of the capital gain would be taxed at 28% and 80% would be exempt as PPR relief is available for the eight years of actual occupation.

If you need assistance with any related matters, please do e-mail Simon at