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PPR relief - what evidence is needed for a claim to succeed?

This article has been provided by tax experts Tax Insider.

The Principal Private Residence relief ('PPR') available to individuals on the disposal of their main residence is probably the most commonly claimed and well known of all reliefs within the capital gains tax legislation. Too often, taxpayers have the impression that just living in a property is sufficient to qualify but the relief is not automatic and there are requirements that need to be satisfied in order for a claim to succeed.

You would have thought that the length of occupation would be the most important factor but recent court cases confirm that just a few days is sufficient. It is, in fact, the quality of occupation and the expectations regarding the residency rather than the length of time actually in occupation that determines whether PPR applies although obviously the longer you live in the property the better will be your case.

Evidence is key - there needs to be 'some evidence of permanence, some degree of continuity or expectation of continuity' for the claim to be valid even if, in the end, the claimant does not live in the property for as long as originally intended.

Various tax cases have been heard on the subject of 'permanence' and a list of suggested documentary evidence that may help in a claim follows:

* Most importantly of all - that the address is the voting address on the electoral register.
* Utility bills in the taxpayer's own name
* Receipts for home insurance, telephone bills, credit reference agency records showing the address as being the main residence
* Car registration address
* Copy fuel bills showing continual occupation (hopefully showing an increase in fuel consumption in the winter months)
* Receipts proving purchase of furniture and furnishings for the property. Delivery notes, if possible
* Bank registration should show the address
* Type of mortgage - preferably a standard mortgage rather than be a 'buy to let'. However, many mortgage providers are not adverse to a property originally purchased as a main residence with a standard mortgage becoming a rental property and as such do not require amendment to the type of mortgage
* Registration of owner with a local doctor
* Photographic evidence of residence
* Proof of locality in proximity with the owner's children's school
* Residence of a partner - where do they live?
* Commuting time to the taxpayers' workplace

And as a final suggestion, introduce yourself to the neighbours to let people know that you actually live there.

HMRC's Capital Gains manual (at CG64545) also lists some indicators.

For more free landlord tax saving strategies, visit the Tax Insider website.

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