Q&As

Can principal private residence relief be claimed on a disposal of agricultural property (not held in trust) by an individual where there has been an earlier claim for hold-over relief?

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Produced in partnership with Paul Davies of Clarke Willmott
Published on: 03 October 2019
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The Finance Act 2004 (FA 2004) introduced a restriction on principal private residence (PPR) relief if the gain arising on disposal of the property includes a gain ‘held over’ under section 260 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992).

Prior to 10 December 2003, a fairly common tax-planning strategy was to settle a property (eg a holiday home) on a discretionary trust, holding over the gain. If a beneficiary of the trust occupied the property as their home, the property could be sold, and the whole of the gain arising (including the ‘held over’ element) would escape taxation.

FA 2004 changed the position. Since 10 December 2003, TCGA 1992, s 226A now provides that no PPR relief is available in the circumstances described above. In other words, the whole gain is taxable, both the

Paul Davies
Paul Davies

Clarke Willmott

Paul Davies is a partner in the private client team of Clarke Willmott. He is a solicitor, a chartered tax advisor, and a member of the Society of Trust and Estate Practitioners, as well as being a chartered accountant (albeit no longer practising as such). He specialises in providing advice across the range of different tax and legal issues that face high net worth individuals, executors, and trustees.

Paul's work spans all areas of private client work, including wills, trusts of all kind, inheritance tax, succession planning, probate and estate administration, and lasting powers of attorney.

Paul acts as a professional trustee for a number of family trusts, and is also regularly called on to act as a professional executor.

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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Discretionary trust definition
What does Discretionary trust mean?

A trust in which the trustees have power to select the beneficiaries to benefit from the trust.

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