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HMRC internal manual

Capital Gains Manual

Private residence relief: only or main residence: two or more residences: ESC/D21

There may be occasions where an individual has more than one residence within Section 222 and not be aware of it. For example, an individual may work in London during the week and stay in a rented flat in the city, but also own a house elsewhere which they use as their residence at weekends and holidays etc.

If the flat is rented under a tenancy then it is a residence within Section 222. However the individual may not realise this and as such may be unaware that they are able to nominate which residence is to be treated as the main residence before the time limit for making a notice expires. It may be the case that based on the facts, see CG64545, the London flat is the main residence. The result of this will be that the only residence likely to give rise to a gain on disposal will not attract relief.

ESC/D21 provides

Where for any period an individual has, or is treated by the Taxes Acts as having more than one residence, but his interest in each of them, or in each of them except one, is such as to have no more than a negligible capital value on the open market (e.g a weekly rented flat, or accommodation provided by an employer) the two year time limit laid down by section 222(5)(a), TCGA 1992 for nominating one of those residences as the individuals main residence for capital gains tax purposes will be extended where the individual was unaware that such a nomination could be made. In such cases the nomination may be made within a reasonable time of the individual first becoming aware of the possibility of making a nomination, and it will be regarded as effective from the date on which the individual first had more than one residence.

Therefore in cases where the interest is such as to have no more than a negligible capital value ESC/D21 extends the time limit until a reasonable time after the person is first made aware that a nomination is needed.

In practice an individual will not normally be aware of the need for a nomination until a residence is sold and a computation of the gain accruing is submitted. So the time limit for making a nomination should be extended for a reasonable period after the computation has been submitted and you have explained the need for a nomination.