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HMRC internal manual

Capital Gains Manual

Private residence relief: change in use: no adjustments

An adjustment under TCGA92/S224(2) is not appropriate where the only change of use occurs when the dwelling house begins or ceases to be used as a residence. The method of computing relief in such circumstances is provided by TCGA92/S223(2) and there is no need for an adjustment to the relief. The effect of TCGA92/S224(2) is to adjust the relief provided by TCGA92/S223. It does not provide an authority to apportion the gain between exempt and non-exempt periods.

Computations apportioning the gain are often submitted when the period in which the dwelling house was used as a residence coincided with a period of high house price inflation. The aim is to increase the relief due.

An example of the type of computation which has been seen is given at CG64771. This form of computation should not be accepted. A correct computation is provided as a comparison.