Muras Matters: Principal Private Residence Nomination

Principal Private Residence Nomination


With the holiday season soon upon us it is perhaps a good time for a reminder of the benefits of an ‘Only or Main Residence’ nomination for Capital Gains Tax (CGT) purposes, as this may be relevant in connection with ownership of a holiday home.

Taxpayers with two or more qualifying residences have the right to nominate which of these is to be regarded as their ‘main’ residence for CGT purposes and this can produce sizeable tax savings when a disposal of one eventually takes place. The reason is that, subject to certain conditions, a taxpayer’s principal private residence is exempt from CGT.


Care is needed to achieve the full benefits but where a taxpayer owns more than one property that is used as a residence (as in the case of a house which is occupied for the majority of the time and a holiday home) an election can potentially result in the whole of one residence being exempt from CGT together with a proportion of the other. Evidence may be required by HM Revenue & Customs that the property qualified as a ‘residence’.

The election must be made within 2 years of a property becoming a residence. It is important to note that married couples or civil partners can only have one main residence between them for CGT purposes.

Since April 2015, an election can be made in respect of an overseas property but only where the taxpayer occupies the property for 90 days in each tax year. In addition the nomination will not prevent foreign CGT, or its equivalent, being charged by the overseas jurisdiction. Any overseas tax may however be available as a credit against any UK liability.

Similarly, for UK properties, Only or Main Residence relief can only be claimed by UK resident taxpayers or non-residents who stay in the property for 90 days or more each tax year, due to changes introduced in April 2015.

Finally, it is worth noting that the reduction in CGT rates from 6 April 2016 do not apply to the disposal of residential property. If a disposal of a holiday home is not covered in full by a relief such as Only or Main Residence then the higher CGT rates of 18% for basic rate income tax payers and 28% for higher rate income tax payers will continue to apply.

Stamp Duty Land Tax (SDLT)

Higher rates of SDLT were introduced on 1 April 2016, where landlords or companies acquired new residential property. These rules are not linked to CGT, therefore the higher rates would apply to individual purchasing a holiday home, despite an Only or Main Residence nomination being made.

This is a brief overview of the benefits and criteria. If you require more information about the benefits of making an election, and how to go about it then please contact our Tax Director Jenny Marks.

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