Category: HMRC

The Biggest Tax Mistakes Made by New Landlords

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Becoming a landlord can seem like a straightforward way to generate additional income and build long-term wealth. However, many first-time landlords quickly discover that property taxation is far more complex than expected.

HMRC has increased its focus on property income in recent years, and simple mistakes can lead to unnecessary tax bills, penalties, and costly investigations.

Here are some of the most common tax mistakes new landlords make — and how to avoid them.

1. Not Registering for Self Assessment

One of the biggest misconceptions among new landlords is assuming that HMRC will automatically know about their rental income through mortgage companies, letting agents, or the Land Registry.

Unfortunately, that is not how it works.

If you receive rental income from a property, you are generally required to register for Self Assessment and submit annual tax returns. HMRC register-for-self-assessment

When Must You Register?

You normally need to register if:

  • Your rental income exceeds £1,000 in a tax year
  • You make taxable profits from property
  • You already complete tax returns for other reasons

https://www.gov.uk/renting-out-a-property/paying-tax

The Risks of Not Registering

Failing to register can result in:

  • Late filing penalties
  • Interest charges
  • HMRC investigations
  • Higher penalties for deliberate non-disclosure

HMRC now receives increasing amounts of data from:

  • Letting agents
  • Deposit schemes
  • Airbnb and online rental platforms
  • Mortgage providers

As a result, undeclared rental income is becoming much easier for HMRC to identify.

Practical Tip

If you have recently started renting out a property and have not yet informed HMRC, it is usually better to make a voluntary disclosure before HMRC contacts you. We have help many new client with voluntary disclosures.

2. Missing Allowable Expenses

Many new landlords end up paying more tax than necessary simply because they fail to claim legitimate expenses.

Rental tax is based on profit, not rental income. That means you should deduct allowable business expenses before calculating your tax liability.

https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income

https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income

https://www.gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies

Common Allowable Expenses

Landlords can usually claim:

  • Letting agent fees
  • Insurance
  • Repairs and maintenance
  • Council tax and utilities (if paid by the landlord)
  • Accountancy fees
  • Replacement furniture and appliances
  • Service charges and ground rent
  • Advertising costs

Repairs vs Improvements

This is an area that often causes confusion.

Generally:

  • Repairs are deductible
  • Improvements are capital expenses and may only reduce Capital Gains Tax when the property is sold

For example:

  • Replacing a broken boiler with a similar model is normally a repair
  • Upgrading to a significantly enhanced heating system may be treated as an improvement

Mortgage Interest Restrictions

Many landlords are also caught out by the mortgage interest rules introduced under Section 24.

Individual landlords can no longer deduct mortgage interest in full when calculating profits. Instead, they receive a basic rate tax credit.

This means some landlords pay tax on profits that are much higher than their actual cash surplus.

3. Joint Ownership Issues

Couples often purchase rental properties together, but many fail to consider how ownership structure affects taxation.

By default, HMRC usually assumes rental income for married couples is split 50:50, regardless of actual ownership proportions.

https://www.gov.uk/government/publications/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17

This can create unnecessary tax exposure if:

  • One spouse is a higher-rate taxpayer
  • One spouse has unused personal allowances or lower tax rates

The Importance of Beneficial Ownership

In some cases, couples can structure ownership differently to improve tax efficiency.

However, this must be properly documented.

Simply deciding between yourselves how to split the income is not enough.

Where appropriate, couples may need:

  • A declaration of trust
  • Form 17 submitted to HMRC
  • Legal advice regarding ownership arrangements

A Common Mistake

Many landlords assume that because one person “manages the property”, all income can be declared on their tax return.

HMRC looks at legal and beneficial ownership, not who deals with the tenants.

4. Poor Record-Keeping

Good record-keeping is essential for landlords, yet it is one of the most overlooked areas.

https://www.gov.uk/self-assessment-tax-returns/records

Many landlords:

  • Lose receipts
  • Mix personal and rental spending
  • Fail to track mileage or expenses
  • Cannot evidence repairs carried out years earlier

This becomes a serious issue if HMRC opens an enquiry.

What Records Should Landlords Keep?

You should retain:

  • Rental statements
  • Bank records
  • Invoices and receipts
  • Mortgage interest certificates
  • Tenancy agreements
  • Mileage logs
  • Purchase and legal documents

Records should generally be kept for at least:

  • 5 years after the 31 January filing deadline

Digital Record Keeping

With Making Tax Digital expected to expand further in future years, digital record-keeping will become increasingly important.

https://www.gov.uk/guidance/check-if-you-need-to-use-making-tax-digital-for-income-tax

Using:

  • Cloud accounting software
  • Separate bank accounts
  • Digital receipt storage

can save significant time and reduce errors.

Final Thoughts

Property can be a strong long-term investment, but many new landlords underestimate the importance of proper tax planning and compliance.

The most common mistakes — failing to register with HMRC, missing expenses, structuring ownership incorrectly, and poor record-keeping — can all become expensive problems later.

Taking advice early and setting up good systems from the start can help landlords:

  • Reduce tax liabilities legitimately
  • Avoid penalties
  • Improve profitability
  • Stay compliant with HMRC

If you are a new landlord and want to ensure your property affairs are structured correctly, professional advice can often save far more than it costs.

Book a meeting to discuss how we can help

We also have the following useful resources

Property Fact Sheets | Bicknell Business Advisers

Monthly Property Newsletter | Bicknell Business Advisers

HMRC Update: New Evidence Rules for £312 Working From Home Allowance (Effective 14 October 2024)

Directors and business owners who claim the £312 flat rate per year (£6 per week) for working from home should be aware of a key policy change from HMRC, effective 14 October 2024. Going forward, claims for this relief must be supported by a formal obligation to work from home, such as a clause in a service agreement, contract, or board resolution.

This change represents a shift from previous practice, where many directors and employees could claim the relief on a discretionary or informal basis. HMRC is now tightening its stance — and the lack of documented obligation will invalidate claims.

🔍 What’s Changed?

From 14 October 2024, HMRC will only accept P87 claims for homeworking expenses if there is written evidence that the employee or director is contractually required to work from home.

The key requirements include:

  • A written agreement (e.g., employment contract, service agreement, or board resolution).
  • A regular and frequent homeworking pattern, typically as a guide at least two days per week, though not necessarily on the same days. The days are not specified in Evidence required to claim PAYE (P87) employment expenses – GOV.UK
  • Voluntary or informal homeworking arrangements no longer qualify.

✅ What Does This Mean for Directors?

If you’re a limited company director working from home, you should:

  1. Update your service agreement or contract to include a homeworking clause.
  2. Pass a board resolution confirming the homeworking requirement.
  3. Ensure the arrangement is regular and necessary for business purposes.
  4. Retain all documentation as part of your company’s formal records.

✍️ Sample Wording for Compliance

To help you stay compliant, below is a model clause that can be included in a service agreement or board resolution:

📄 Homeworking Requirement – Example Clause

“The Company requires the Director to work from their home address at [insert address] for a minimum of [insert number] days per week. This arrangement is a condition of employment and is necessary for the proper performance of the Director’s duties. The Director’s home is deemed an official workplace for the purposes of fulfilling their role and responsibilities. The Company will review this arrangement annually, but it will remain in place unless varied in writing by mutual agreement. The Director must ensure that their homeworking environment is suitable for conducting business and agrees to be available and contactable during normal business hours on homeworking days.”

🗂️ Supporting Board Resolution – Example

“At a meeting of the Board of Directors held on [insert date], it was resolved that [Name of Director] is contractually required to work from home at least [insert number] days per week as part of their duties for the Company, with effect from [insert date]. This resolution is to be retained with the Company’s records as evidence of the homeworking requirement.”

💡 Claims Above £312?

If actual costs exceed the £6 per week flat rate, higher claims may be allowable, but these will require:

  • Strong supporting documentation, and
  • In some cases, pre-approval from HMRC.

🛠️ Next Steps

If you currently claim the flat rate and do not have documented homeworking requirements in place:

  • Review your existing contracts.
  • Draft a resolution or contract amendment now.
  • Contact Bicknell Business Advisers for assistance in formalising the arrangement.

How Section 24 Affects Property Investors – What You Need to Know

Property investment remains one of the UK’s most popular routes to building long-term wealth—but recent tax changes have significantly impacted profitability. One of the most important changes affecting landlords is Section 24 of the Finance (No. 2) Act 2015, commonly referred to as the “mortgage interest relief restriction.”

This restriction now affects Furnished Holiday Lets as well as Buy to Lets and HMO’s.

The changes to Holiday Lets and Serviced Accommodation are covered in this blog.

Holiday Lets – Good news for Capital Allowances – Steve J Bicknell Tel 01202 025252

More details on Section 24 are in this blog

Residential Letting – What is the Finance Cost Allowance and how are Unused Finance Costs used up? – Steve J Bicknell Tel 01202 025252

If you’re a portfolio landlord or considering property investment, understanding Section 24 is essential for financial planning and compliance.

❓ What is Section 24?

Introduced in 2017 and phased in over four years, Section 24 removes the ability for individual landlords to deduct all of their mortgage interest from rental income before calculating their income tax.

Instead of full relief, landlords now receive a basic rate tax credit (20%) on their finance costs.

💡 Why It Matters

If you own property in your personal name, this change can push you into a higher tax bracket—even if your real profits haven’t changed.

Example:

  • Rental income: £40,000
  • Mortgage interest: £25,000
  • Before Section 24: You paid tax on £15,000
  • Now: You pay tax on the full £40,000, then receive a 20% credit on the £25,000 mortgage interest

This could increase your tax bill substantially, especially for:

  • Higher rate taxpayers
  • Portfolio landlords with significant debt
  • Those receiving child benefit or working tax credits, where higher income triggers a clawback

🏛️ Company Ownership as an Alternative

Many investors are now considering buying property through a limited company, which is not affected by Section 24.

Key benefits:

  • Mortgage interest remains fully deductible
  • Corporation tax applies (currently 19–25%)
  • Potential long-term inheritance tax planning advantages

But it’s not right for everyone—incorporation involves costs, complexity, and potential capital gains tax (CGT) or stamp duty implications.

🔎 What Should You Do?

A professional review is essential. At Bicknell Business Advisers, we help landlords and property investors across the UK understand:

  • How Section 24 affects your tax position
  • Whether incorporation is right for you
  • How to structure your investments tax-efficiently
  • Planning strategies to reduce your tax exposure

📞 Book a Free Consultation Today

If you’re unsure how Section 24 is impacting you, or want to explore your options, get in touch today.


📞 Call: 01202 025252
🌐 Visit: www.bicknells.net

At Bicknell Business Advisers, we specialise in helping landlords and property businesses navigate complex tax legislation with clarity and confidence.

Case Study – Tax Saving £32,085

Undisclosed Property Income

Mrs H contacted us in April 2023, HMRC had contracted her about undeclared property income dating back to 2010-11. Mrs H had already been in discussion with HMRC and supplied information and HMRC had made an assessment in March 2023, the assessment added up to £54,798. HMRC request agreement and payment by 11th April 2023.

The clients daughter was already a client and felt the assessment seemed to too high and suggested Mrs H seek advice from a property tax expert and recommended us.

Mrs H had spoken to other accountants and felt little could be done.

We asked HMRC for more time to which they agreed.

woman in white shirt showing frustration
Photo by Andrea Piacquadio on Pexels.com

Detailed Analysis

We reconstructed the records for the period 2021-22 to 2010-11. This was highly detailed work looking at

  • Bank Statements
  • Letting records
  • Expenses
  • Credit Card Statements
  • Other records

This was basically a forensic exercise, we shared the information with HMRC and questions went backwards and forwards over many months.

HMRC Agreed Figures March 2024

Its take a year, but on the 11th March 2024 HMRC issued a new assessment requesting payment of £22,713 which Mrs H has accepted. Saving £32,085 on the original assessment.

This is a great example of how compiling accurate and detailed records can save you considerable amounts of tax.

It also demonstrates the need to work with an accountant who is an expert in Property Tax.

Feefo Client Review

 I’m so grateful and honoured to have been recommended the outstanding service of Bicknell. Long may it continue.

Star Rating: ★★★★★

Contact Us

If you need help book a virtual meeting and we can have chat

steve@bicknells.net

Holiday Let – anti-forestalling rule

The March 2024 Budget was bad news for Furnished Holiday Lets (FHL)/Serviced Accommodation.

Abolition of the Furnished Holiday Lettings (FHL) tax regime

As announced at Spring Budget 2024, the government will abolish the Furnished Holiday Lettings tax regime, eliminating the tax advantage for landlords who let out short-term furnished holiday properties over those who let out residential properties to longer-term tenants. This will take effect from April 2025.

Draft legislation will be published in due course and include an anti-forestalling rule. This will prevent the obtaining of a tax advantage through the use of unconditional contracts to obtain capital gains relief under the current FHL rules. This rule will apply from 6 March 2024.

https://www.gov.uk/government/publications/spring-budget-2024-overview-of-tax-legislation-and-rates-ootlar/spring-budget-2024-overview-of-tax-legislation-and-rates-ootlar

The advantages likely to be affected are:

• Interest incurred on borrowings is fully deductible against taxable profits
• Beneficial capital allowances rules allowing tax relief for fixtures
• Various capital gains tax reliefs, including potential for business asset disposal relief (10% rate on sale), rollover relief and gifts hold-over relief
• Profits from FHLs can be treated as relevant earnings for pension purposes
• Income from a FHL held jointly by a married couple or civil partners is not caught by the default 50:50 split for income tax purposes

The anti-forestalling Rule

We are still awaiting the detail, but its likely that FHL’s owned by companies will not be affected by the changes. That means that company ownership would be the best option.

The anti-forestalling rule seems to prevent conditional contracts but it may still be possible to simply sell your FHL to your own company at an arms length market value, this would incur stamp duty but if the rules don’t come in to force until 2025 you might get Incorporation Tax Relief or Business Asset Disposal Relief which would save Capital Gains Tax.

As the rules are likely to be out soon its best to wait before taking action.

Time to Plan

Now is the time to consider

  • The impact of the changes on your tax
  • Whether to sell
  • Whether to sell to your own Company
  • Whether to change the use to Assured Short Term Tenancies

Working out your plan now could save you considerable tax in 2025.

steve@bicknells.net

Holiday Let Tax Grabbing UK Budget

The of end FHL tax breaks

The Furnished Holiday Lettings (FHL) tax regime will be abolished from April 2025. Draft legislation is to be published and will include anti-forestalling measures that will apply from 6 March 2024. The effect of abolishing the rules will be that short-term furnished holiday lets and longer-term residential lets are treated the same for tax purposes and individuals will no longer need to report the two income streams separately.

The advantages likely to be affected are:

• Interest incurred on borrowings is fully deductible against taxable profits
• Beneficial capital allowances rules allowing tax relief for fixtures
• Various capital gains tax reliefs, including potential for business asset disposal relief (10% rate on sale), rollover relief and gifts hold-over relief
• Profits from FHLs can be treated as relevant earnings for pension purposes
• Income from a FHL held jointly by a married couple or civil partners is not caught by the default 50:50 split for income tax purposes

Brightline Test

The OTS report outlines a suggested ‘brightline’ test to provide a clear test for when property letting activities subject to income tax would qualify as a trade. It proposes possible factors to be considered within the test are:

  • minimum number of properties let
  • letting is on a short term basis
  • no personal use of the let
  • level of personal time devoted to the property letting and services provided

Good news on CGT

Residential higher rates will be reduced on chargeable gains on residential properties, with the exception of any element that qualifies for Private Residence Relief. These rates are changed from 18% and 28% in 2023/24 to 18% and 24% in 2024/25

But its still bad news for Holiday lets as they will lose Business Asset Disposal Relief meaning CGT at 10%

Changes to SDLT

A number of changes are made to the Stamp Duty Land Tax (SDLT) regime. These include the following:

• The abolition of Multiple Dwellings Relief

• Changes to First-Time Buyer Relief to extend it to individuals buying a new residential lease via a nominee or bare trust for transactions

Click here to download our free budget report

steve@bicknells.net

Self Assessment 2023 – file by the 17th January or risk penalties

close up photo of shocked woman

According to the BBC

Fujitsu Services workers in the West Midlands are set to strike later this month in a dispute over pay, which a trade union has said is likely could cause disruption for people filing self-assessment tax returns.

About 300 members of the PCS union based in Stratford-upon-Avon and Telford are set to take part in the walk-out on 17 January.

Those joining the strike are mainly those working on behalf of HM Revenue and Customs.

The issue reported by Computer Weekly…

All of the participating employees are members of the Public and Commercial Services (PCS) Union, and are set to strike after rejecting a 3-4% pay rise from Fujitsu after learning that employees working for the company in Japan are being offered salary increases of up to 29%.

If you don’t file your self assessment return by 31st January you will get penalties.

You’ll pay a late filing penalty of £100 if your tax return is up to 3 months late. There are extra penalties after that and interest is charged on amounts due to HMRC.

But late filing also increases your chance of being investigated by HMRC, the logic is that leaving things till the last minute suggests you are disorganised and more likely to make mistakes.

Don’t miss the deadline, make sure your return is filed before the 17th January 2023.

steve@bicknells.net

Understanding the Tax Consequences of s455 Directors Loan: A Guide for UK Business Owners


If you’re a director or shareholder of a UK company, it’s important to understand the tax consequences of s455 Directors Loan. Failure to comply with HMRC regulations can lead to penalties and additional tax liabilities. In this blog post, we will explore the tax implications of s455 Directors Loan, the rate of tax payable, when and how the tax is paid, reclaiming the tax, benefits in kind, board resolutions, bed and breakfasting loans, anti-avoidance rules, relief time period, and including relevant notes in micro accounts.

  1. Understanding s455 Directors Loan:
    S455 Directors Loan refers to money borrowed by a company director or shareholder from their company. If the loan is not repaid within 9 months following the end of the accounting period, it can incur tax implications for both the company and the director.
  2. Rate of Tax Payable:
    The rate of tax payable on s455 Directors Loan is currently set at 33.75% of the outstanding loan amount. This tax is paid by the company, not the individual director or shareholder.CTM61505 – Close companies: loans to participators and arrangements conferring benefit on participator: general – HMRC internal manual – GOV.UK (www.gov.uk)
  3. When is Tax Payable?
    The tax on s455 Directors Loan is typically due at the same time the company’s corporation tax is due – nine months and one day after the end of the accounting period in which the loan was made.
  4. How is Tax Paid?
    Tax payable on s455 Directors Loan is paid by including it as part of the company’s corporation tax liability, which is reported and paid through the Corporation Tax Return (CT600).
  5. Reclaiming the Tax:
    The tax paid on s455 Directors Loan can be reclaimed by the company after the loan has been repaid. LC Forms (hmrc.gov.uk)
  6. Benefit in Kind on Directors Loan:
    If the loan exceeds £10,000, the company may need to report it as a “benefit in kind” for the director. This means that the individual may be subject to personal income tax on the value of the loan unless the Director/Shareholder pays interest on the loan at least at the approved HMRC rate.
  7. Board Resolution for Loans over £10,000:
    To avoid the potential income tax implications of benefit in kind, a board resolution should be implemented authorising the director’s loan. This should be done before the loan is taken or within nine months of the company’s year end. A loan agreement is also recommended.
  8. Bed and Breakfasting Loans:
    To prevent circumventing the 9-month rule, bed and breakfasting occurs when the director repays the loan just before the end of the 9-month period and immediately takes out a new loan. Anti-avoidance rules are in place to discourage this practice. The key rules are the ’30 day rule’ and ‘intentions and arrangements rule’.
  9. Anti-Avoidance Rules:
    HMRC has anti-avoidance rules in place to prevent the abuse of s455 Directors Loan transactions. It is essential to ensure that all loans between directors/shareholders and their companies are conducted fairly and genuinely.
  10. Relief Time Period – 9 Months:
    The relief time period refers to the nine months following the end of a company’s accounting period. If the loan is repaid within this period, the tax paid on s455 Directors Loan can be reclaimed.
  11. Including Notes in Micro Accounts:
    Micro entities are required to prepare and submit detailed notes as part of their financial statements. It is important to include relevant notes regarding any outstanding s455 Directors Loan, as this will provide transparency during the tax assessment process.

Conclusion:
Understanding the tax consequences of s455 Directors Loan is crucial for UK business owners. By addressing the tax liabilities promptly, ensuring compliance with regulations, and seeking professional advice, companies can navigate this complex area of taxation efficiently. Stay informed, keep accurate records, and stay on top of your financial obligations to avoid any unnecessary penalties or additional tax liabilities.

steve@bicknells.net

Spreading your tax costs with Time To Pay

HM Revenue & Customs (HMRC) expects you to pay your taxes on time. But if you’re finding it difficult to pay in full, HMRC can be approached to allow a Time to Pay arrangement.

A Time to Pay arrangement will allow you to pay your debt off in pre-agreed installments, reducing the impact of a large tax bill – and helping you manage your debt and cashflow.

How does Time to Pay work?

If you need to request a Time to Pay arrangement for self-assessment tax, Employer’s PAYE and VAT, these can often be made online using a ‘self-service’ system.

Where you owe other types of tax, or where the conditions for online applications are not met, you’ll need to contact HMRC to discuss your situation.

  • The easiest (although not always the quickest) way to discuss your Time to Pay request is by telephone to 0300 200 3835.
  • HMRC agents will want to know about all taxes you owe, not just the one(s) where you want to spread payment. They will also ask for details of your income and outgoings, and any savings or assets that may be able to be used to reduce the amount owed.
  • Presuming that you agree to a payment plan with HMRC during the call, they will usually want to set up a Direct Debit straight away.

Making use of the self-serve Time to Pay system

If you don’t have any existing payment plans or debts with HMRC, the ‘self-serve’ system may be more straightforward, provided that the applicable tax returns have already been filed. The conditions and amounts vary depending on the particular tax.

For example:

  • Self-Assessment: You must apply no more than 60 days after the payment deadline and owe no more than £30,000.
  • Employer’s PAYE: You must be within 35 days of the deadline, owe no more than £15,000 and have no outstanding penalties. The maximum period over which the amount due can be spread is six months.
  • VAT: For VAT, you need to apply within 28 days of the due date and owe no more than £20,000. You can’t apply for a Time to Pay arrangement through the self-serve scheme if you use either the cash accounting or annual accounting schemes.

The self-serve option for Time to Pay does make the process easier, but remember that HMRC isn’t obliged to offer you the option of settling your taxes owed via installments.

If you fail to pay your taxes, HMRC can take recovery action in the County Court, and apply for the taxpayer to be put into liquidation or made bankrupt where appropriate.

Talk to us about making Time to Pay work for you

One of the best ways to avoid getting into difficulties with your tax liabilities is to work more closely with your accountant. As your tax adviser, we’ll produce regular forecasts so that any financial stresses can be foreseen well in advance.

Where unexpected circumstances do arise, putting a suitable payment plan in place with HMRC is the most sensible way to manage this situation. Ignoring your tax problems won’t make them go away and burying your head in the sand can lead to serious penalties and legal action.

Get in touch to talk about Time to Pay.

Steve@bicknells.net

Maximizing Principle Private Residence Relief: Understanding Deemed Occupation and Qualified Absence

couple walking in the street carrying plants and boxes

Introduction


As a UK accountant, it’s crucial to guide clients on the various tax planning opportunities available. One such opportunity is Principle Private Residence (PPR) Relief, which provides tax benefits to individuals who sell their main residence. In this blog post, we will explore the concept of deemed occupation and qualified absences, including eligibility criteria and examples. So, let’s delve into the details!

Understanding Deemed Occupation


Under certain circumstances, an individual’s absence from their main residence can still be considered as occupation for tax purposes. This concept is known as deemed occupation. It allows individuals to claim PPR Relief even when they are not physically present in their property. Let’s explore the qualifying absences.

Absence Qualifying as Deemed Occupation


a. 3 Years for Any Reason: Individuals can claim deemed occupation for up to three years, regardless of the reason for their absence. It could be due to travel, work-related commitments, or simply personal circumstances.
b. 4 Years for Employment Elsewhere: If an individual is employed elsewhere and occupies the property sporadically during a four-year period, the absences can still qualify as deemed occupation.
c. Any Period Required to Work Abroad: Individuals who are required to work abroad can claim deemed occupation during their period away from their main residence.
d. Up to 2 Years at the Start of Ownership with Qualifying Delay: If there is a delay in occupying the property at the start of ownership due to qualifying reasons, individuals can claim deemed occupation for up to two years.

HMRC CG64555: Armed Forces


Special considerations apply to members of the armed forces. Under HMRC CG64555, individuals serving in the armed forces are entitled to claim deemed occupation even if they have not occupied the property for the qualifying period.

Letting During Qualified Absence


During a qualified absence, individuals may choose to let their property. In this case, they are still eligible for PPR Relief on the periods of deemed occupation.

CG65050 – Residence before/after period of absence

It is a condition of s223(3) TCGA92 that both before and after the period of absence there must be a time in which the dwelling-house was its owner’s only or main residence unless they were prevented from resuming residence as a consequence of their or their spouse or civil partner’s employment requiring them to live elsewhere. The periods of residence do not have to be immediately before and after the period of absence.

Examples of Absence Qualifying as Deemed Occupation

a. Sarah, an engineer, temporarily moves abroad to complete a project for four years. Her home remains vacant during this period. She can claim deemed occupation for the first three years.


b. John, a member of the armed forces, is posted overseas for three years. Although he does not occupy the property during this time, he is entitled to claim deemed occupation for the entire period.

Conclusion


Understanding the concept of deemed occupation and qualified absences is essential for maximizing Principle Private Residence Relief. By being aware of the eligibility criteria and utilizing these provisions effectively, individuals can ensure significant tax savings.

steve@bicknells.net