In 2010 we wrote this blog, explaining how an individual should consider making a S222(5) election to ensure the optimal treatment of their Principal Primary Residence for the purposes of Capital Gains Tax.

It would seem HMRC don’t read this blog, and accordingly took a case to the First-tier Tribunal (Mrs P A Ellis v HMRC [2013UKFTT 003), which they’ve lost.

In simple terms, the statute clearly states that where an individual resides in more than one property they may choose to which property the Principal Primary Residence exemption from Capital Gains Tax will apply. This can potentially reduce the Capital Gains Tax on the subsequent sale of a home.

The First-tier Tribunal did not accept HMRC’s arguments.  Judge Geraint Jones QC held that:

[HMRC can] challenge the assertion made by the taxpayer that a particular property is a residence used/occupied by him, but once it is proved or accepted that a particular property is a residence used/occupied by the taxpayer, [HMRC] cannot argue that as a matter of fact and degree that residence is not the taxpayer’s main residence if an election has been made in favour of that property under s 222(5).


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