CG64555 - Private residence relief: two or more residences: job-related accommodation

S222(8) TCGA92 sets out that where an individual

•resides in living accommodation which is job-related within the meaning of S222(8A) TCGA92 to S222(8D) TCGA92 and

•has an interest in a dwelling-house which they intend to occupy in due course as their only or main residence

the private residence relief provisions will apply to the dwelling-house which they intend to occupy as if it were actually occupied as a residence during the period in which the intention to occupy it existed.

Living accommodation is job-related if it is provided by reason of the individual’s employment, or by reason of the employment of the individual’s spouse or civil partner, in any of the following cases:

•where it is necessary for the proper performance of their duties, or

•where it is provided for the better performance of their duties and where the provision of living accommodation is customary for that type of employment, or

•where the accommodation is provided as part of special security arrangements.

Where a serving member of the armed forces is in receipt of payments from the MOD under its Future Accommodation Model (FAM) living accommodation is job-related if:

•an armed forces accommodation allowance for or towards costs of the accommodation is paid to, or in respect of, the individual or the individual’s spouse or civil partner. An “armed forces accommodation allowance” means an allowance which is exempt from income tax by reason of s297D ITEPA03.

Where the living accommodation is provided by a company and the employee is a director of that company or of an associated company the accommodation will not be treated as job-related unless:

•the employee has no material interest in the company in which he or she is a director and either,

•their employment is as a full time working director, or

•the company is non-profit making, or

•the company is established for charitable purposes only.

Accommodation is also job-related where,

•the individual or their spouse or civil partner are contractually required to reside in premises provided by another person from which they carry on a particular trade, profession or vocation.

The accommodation is not treated as job-related where the accommodation is in whole or part provided by:

•a company in which the individual or their spouse or civil partner, has a material interest

•any person(s) with whom they or their spouse or civil partner carry on a trade or business in partnership.

As the legislation deems the dwelling-house to be a residence, where appropriate, the individual may nominate the dwelling-house to be treated as their only or main residence under s222(5) TCGA92, see CG64485.

Job-related accommodation will be occupied either under a service occupancy or a tenancy. Under a service occupancy the property is occupied under licence and as such it is not a residence within the meaning of s222 TCGA92. Therefore, if the individual has only one other residence, there is no need to make a nomination in favour of the property which is intended as the main residence in due course. Job-related accommodation occupied under a tenancy is a residence within the meaning of s222 TCGA92. Therefore, the individual may nominate which of his or her residences is to be treated as the main residence, see CG64485. In the absence of a nomination, the main residence must be established by reference to the facts, see CG64545.

It may be that the individual never actually occupies the dwelling-house that they intended to occupy due to a change in circumstances or some other reason. Nonetheless, providing it was always the individual’s intention to occupy that dwelling-house, relief will be available.

However, if the intention to occupy the dwelling-house ceases then the dwelling-house is no longer treated as a residence.

Example

W is a farm worker who has lived in a cottage provided by his employer on the farm since 2000. He has a licence to live there for as long as he is an employee. The cottage is job-related accommodation within the terms of s222(8A) TCGA92 to S222(8D) TCGA92.

In July 2011 he acquired a house on the coast intending to occupy the property as his only or main residence on his retirement in 2023.

In June 2015 his circumstances changed, and he decided that he no longer wanted to retire to the coast. He retained the property for a while but sold it in December 2020.

W is entitled to relief for the 48 months that he intended to occupy the house as his only or main residence. Also, because during his period of ownership the house was deemed to be his only or main residence, W is entitled to relief for the final 9 months of ownership (see CG64985) up to December 2020. So, 57 months of the total period of ownership qualify for relief.

There may be circumstances where the dwelling-house is let or used for some other purpose whilst the individual occupies the job-related accommodation. This will not prevent relief from being available, although if the lease of the dwelling-house extends beyond the period of expected occupation of the job-related accommodation, this may be evidence that there was no intention to occupy the dwelling-house at the end of the period.