Changes to the Capital Gains Manual

Private residence occupied by dependent relative before 6th April 1988

We are planning to change the guidance in the Capital Gains manual where a private residence is occupied by dependent relative before 6th April 1988.

A private residence occupied by a dependent relative before 6th April 1988 may qualify for private residence relief for capital gains tax purposes. Guidance on the relief can be found in the Capital Gains manual at CG65550 onwards.

CG64718 currently explains that in such cases the further relief provided for by section 223(4) Taxation of Chargeable Gains Act 1992 where the residence has also been wholly or partly let out as residential accommodation (‘lettings relief’) will not be due. CG64718 will be amended to reflect our change of view that lettings relief may be due. We will also withdraw CG65562which says that lettings relief is not due where private residence relief is due on a residence occupied by a dependent relative.

If taxpayers wish to amend their 2005/06 return they must do so by 31 January 2008. Taxpayers who have already filed their 2006/07 returns have until 31st Jan 2009 to amend their returns. If there is an open enquiry into a return and we are able to amend it at the conclusion of the enquiry, we will amend it to reflect our current view.

The time limit for making a claim for this relief is five years from the 31st January following the end of the tax year in which there is the disposal of a residence. So, the time limit for making a claim for 2001/02 expires on 31 January 2008. Where a claim has been made and it is subsequently discovered that an error or mistake has been made in the claim, a supplementary claim may be made within the time allowed for making the original claim.