Principal Private Residence relief: anti-avoidance restriction on delayed completion withdrawn

Fri 25 Apr 2014

When the Chancellor announced that the final part of a PPR’s ownership which would automatically qualify for CGT relief was to be reduced from 36 to 18 months he also proposed to include an anti-avoidance provision.

To prevent owners setting up uncompleted contracts speculatively the original announcement (see HMRC explanatory note 14 February 2014) the draft Finance Bill originally contained a provision that would have applied the reduced, 18 month final relief period in every case where completion took place after 5 April 2015.

For CGT purposes it is the date of contract that is the date of disposal and the Chancellor/Treasury/HMRC were concerned that people might exchange contracts for sale, e.g. to a family trust, before 6 April 2014 to crystallise the full PPR relief even where they had not yet secured a buyer. The idea behind this was that the trust would assign the benefit of the contract to the eventual buyer who would complete the sale with the owner who would not lose PPR relief. How many people might have bothered to go to this trouble was never clear and the restriction did not appear in the Bill introduced to Parliament on 29 March.