Published: 12/05/2021 By Allan Fuller
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.