Published: 12/05/2021 By Allan Fuller
The last year has brought a host of changes, one in particular is the increase in working from home. As restrcitions ease it will be very interesting to see to what extent this continues. There are many benefits but there could be unforseen pitfalls that may not be obvious.
The normal situation is that there is no tax on the profit when a sole principal residence that has always been occupied by the owner is sold. However if part of the house, or perhaps a garden room has been claimed as a work expence this opens up the potential for a liability to pay tax on the proportion of a property to have a tax liability when sold. The potential risk to sellers surrounds so-called Principal Private Residence relief, or PPR, and the 1992 Taxation Of Chargeable Gains Act.
Section 224 of the Act states that areas of a private home ”used exclusively for the purpose of a trade or business, or of a profession or vocation” may be denied the PPR relief.
We are not accountants, or tax advisors, so if this is a matter that concerns you we strongly suggest you get professional advice.