CG65410 - Private residence relief: settled property: introduction

Settled property is defined at CG33230 as property held in trust, with the exception of property held on a bare trust, which is considered at CG34300+.

For example, property which is held on a statutory trust for sale on behalf of tenants in common each of whom is absolutely entitled, see CG70500+, is property held on a bare trust and so is not treated as settled property for Capital Gains Tax purposes. Relief will not be due under TCGA92/S225 but may be due under Section 222 or Section 226 to individual tenants in common if they personally meet the conditions for relief.

CG65365+ explains that certain orders made by a Court following the permanent separation or divorce of a married couple, or following the permanent separation or dissolution of the civil partnership of a couple within that civil partnership, can create settled property and so can give rise to relief under Section 225 on a subsequent disposal. The example at CG65376 illustrates the operation of relief in these circumstances.

Section 43(3) Inheritance Tax Act 1984 treats a lease of a property for life as a settlement and the property as settled property for Inheritance Tax purposes. This does not apply to Capital Gains Tax. A lease for life should not be regarded, for the purpose of TCGA92/S225, as settled property.

A trust may be created in two ways, see CG33260+. Express trusts are generally made in writing and are considered at CG65415-CG65416. Implied trusts arise by operation of law and are considered at CG65417-CG65419.