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HMRC internal manual

Capital Gains Manual

Private residence relief: only or main residence: meaning of residence

The word residence is not defined in the legislation so it must be given its ordinary meaning. For an individual its ordinary meaning is the dwelling in which that person habitually lives: in other words, his or her home.

There are certain circumstances where the legislation deems a dwelling house to be the residence of an individual even though it is not occupied by that individual as their as a home. These circumstances are set out at CG64477.

In all other circumstances a dwelling house must be occupied by the individual as a residence before it can qualify for relief.


Judicial interpretation

The scheme of private residence relief was summarised by Brightman J in Sansom v Peay (52TC1) as,

“To exempt from liability to Capital Gains Tax the proceeds of sale of a person’s home.”

Here Brightman J uses the word ‘home’ in substitution for the word ‘residence’.

And in Frost v Feltham (55TC10), where the Court was asked to decide which of an individual’s residences was his main residence, Nourse J stated,

A residence is a place where somebody lives.”

These quotations clearly emphasise the point that the test of residence is one of quality rather then quantity: the dwelling house must have become the owner’s home.  There is no minimum period of occupation that would enable an individual to establish a residence.  This was confirmed by Millet J in Moore v Thompson (61TC15) where he stated,

“It is clear that the Commissioners were alive to the fact that even occasional and short residence in a place can make that a residence; but the question was one of fact and degree for the Commissioners.”

Every case must be decided upon its own particular facts.