C3.1708 Private residence exemption for trusts and settled property
A settlement, whether by deed or will, may provide that a beneficiary is to have the use of property during his or her life or for some other period. A beneficiary may thus be occupying as his or her only or main residence a dwelling house, or part of a dwelling house, under the terms of a settlement. For property settled via a court order during divorce or dissolution of civil partnership, see C3.1707.
The trustees are the owners of the property in relation to any gain accruing to the trustees on the disposal by them of the beneficiary's residence, but any such gain may be wholly or partially exempt according to the circumstances and length of the beneficiary's occupation. For these purposes the beneficiary is treated as if he or she were occupying the property as the owner. It is the beneficiary's circumstances which are taken into account for the purposes of deciding whether there is a non-qualifying tax year, ie the 'residence in a territory' and 'the day count' test. (see C3.1705)1.
The exemption applies to gains accruing to trustees on the disposal of a house if during the period of their ownership of it the house has been occupied as his or her only or main residence by a person 'entitled' to occupy it under the terms of the settlement2.
PPR relief must be claimed by the trustees
Note that the trustees must make a claim to exempt the