Is this the end of “flipping”?
Where an individual has more than one home, under s.222(5) TCGA 1992 they can make an election to choose which one is their main residence and, therefore, qualifies for private residence relief (PRR). By making the election, it is possible to minimise the CGT charge on the properties by switching (“flipping”) the election between them. The election must be made within two years of the combination of residences changing and can then be varied at any time.
Hidden in Section 3 of HMRC’s consultation document on “Implementing a capital gains tax charge on non residents” is a proposal for the current PRR election to be scrapped – for all UK home owners, not just non-residents – and replaced with PRR being limited to the property that:
· Is demonstrably the person’s main residence – this would not be based solely on where an individual spends their time, but also factors such as where children live and attend school, where the individual is registered to vote, which property is the contact for bank and tax correspondence and where the person is registered with a doctor; or
· Meets a new fixed rule – it’s the property in which the person has been present for most of any given tax year.
No final decision has been taken – its only a consultation at the moment – but it is probable that any changes could come in from April 2015 say Harris & Co accountants Northampton #accountantsnorthampton.