Making the most of Principal Private Residence Relief (PPR)

    If you own a house with land, you will know how important it is to plan tax so that you can keep the proceeds from a sale by minimising your liability for Capital Gains Tax. The principal means of achieving this is through Principal Private Residence Relief (PPR).

    Broadly speaking, PPR is applicable if the homeowner has used the house as their principal residence from the date when occupation was first taken, or from 31 March 1982, whichever is earlier. The relief may be applied to the capital gain made from a house, its outbuildings and grounds, generally limited to a maximum area of 0.5 hectares (1.25 acres), known as the ‘permitted area’.

    In general, PPR cannot be applied to land or outbuildings beyond the permitted area unless it can be shown they are required for ‘the reasonable enjoyment of the property’. And often a case can be made for extending in this way. We have a very high success rate in arguing for PPR to be applied to additional land; the largest acreage for which we have secured PPR is 54 acres.

    Arguing on the grounds of heritage and historical association generally requires little more than establishing natural demarcations in the lots of an estate, or demonstrating that gardens or parkland have long been integral to the enjoyment of the property. Secondary property used as service accommodation is another grounds for a case: properties that serve the main house, such as lodges, can be integral to the ‘enjoyment’ and practical running of the main house.

    Each case must be submitted to HMRC, and each one rests on the individual nature and use of the property. Savills has in-house experts with market-leading knowledge of PPR. We can advise on the deeper permutations of the issue, as well as on a whole range of associated issues as part of an extended tax plan. If you think we might be able to help you, please telephone me on 020 7877 4724.

     
     

    Key contacts

    Clive Beer

    Clive Beer

    Head of Professional Services
    Rural

    Savills Margaret Street

    +44 (0) 20 7877 4724

    +44 (0) 20 7877 4724