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HMRC internal manual

Capital Gains Manual

Private residence relief: example: Mesher Order

Mr C bought a house in 2000 and occupied it with his wife as their only residence until 2004, when they separated. Mr C moved into rented accommodation while Mrs C continued to reside in the house. They divorced in March 2008. By a Court Order in May 2008 Mr C was ordered to hold the property on trust for Mrs C and the children until the youngest child, who was then 14, was 18. The youngest child reached 18 in January 2012 and the property was sold in February 2012.

The Court Order in May 2008 results in a transfer into trust and so is an occasion of charge on Mr C under TCGA92/S70. Mr C makes a claim for TCGA92/S225B to apply and so private residence relief will be due in full.

There is a second occasion of charge on Mr C in January 20012 when the youngest child reaches 18. You should allow full relief under TCGA92/S225, see CG65400+. No relief is due when the dwelling house is sold in February 2012 but any increase in value between January and February is likely to be negligible and so a chargeable gain is unlikely to accrue.