TC09585 - [2025] UKFTT 00867 (TC)

The conclusions which we have reached above means that the Appellant is entitled to the principal private residence exemption from CGT for a portion of the gain which he made on each Property. That portion is to be determined under the rules in Section 223 of the TCGA.

Section 223(2) of the TCGA specifies that the proportion of the gain which is exempt is to be determined by applying to the overall gain a fraction of which:

Before applying that fraction to the gain made in the case of each Property, we should observe that, at the hearing, both parties proceeded on the basis that the Appellant’s period of ownership of each Property should be determined by reference to the dates on which he completed his acquisition and disposal of the relevant Property and not the dates on which the contracts for the acquisition and disposal were executed, as would seem at first blush to be required by Section 28 of the TCGA. (That provision specifies that, for the purposes of CGT, where an asset is disposed of and acquired under an unconditional contract, the time at which the disposal and acquisition is made is the time of the contract and not the time when the asset is conveyed or transferred.) We were initially surprised that the parties had adopted that approach because there is nothing in Sections 222 et seq. of the TCGA which expressly precludes Section 28 of the TCGA 1992 from applying. However, the parties’ approach is entirely consistent with the Court of Appeal decision in Higgins v The Commissioners for Her Majesty’s Revenue and Customs [2020] All ER 451 (“Higgins”) and we will therefore proceed on the same basis.

Turning then to the application of Section 223(2) of the TCGA in the present case to each Property other than 28 Bramshill Close, it is apparent that, as a result of the Appellant’s intention at the point when he acquired each such Property in due course to occupy the relevant Property as his only or main residence, the entire gain on each such Property falls within the principal private residence exemption based on the existence of JRA. This is because:

The position is not as straightforward in the case of 28 Bramshill Close. This is because that Property was owned for a little over 28 months and the period which the Appellant was entitled by Section 223(3) of the TCGA to take into account as part of the period of exemption for that Property was only 19 months – the one month we have found that he actually had the intention in due course to occupy the Property as his only or main residence – see paragraphs 77(2) and 80(2) above – and the 18 months for which Section 223(2) of the TCGA provided no matter how long that intention continued.

The result of this is that, in the case of 28 Bramshill Close, only some part, but not all, of the gain falls within the exemption. That part amounts to a little under 19/27ths of the gain, leaving a little over 8/27ths of the gain as within the charge to CGT. (We say “a little under” and “a little over” because the Property was acquired on 9 October 2012 and disposed of on 22 January 2015 and therefore there were some 13 additional days between 9 January 2015 and the date when the Appellant ceased to own the Property. Having said that, it would seem from Higgins at paragraph [18] that computations made using months rather than weeks or days are acceptable to the Respondents in this context.) Even if the additional days are brought into account in this case, because the overall gain on the Property was £30,000, the amount of the gain which is not exempt is a little over £8,888.89.

It was common ground at the hearing that the only capital gains made by the Appellant in the tax years in question were the capital gains he made on the Properties. It follows that the capital gain described in paragraph 112 above falls well within the annual exempt amount for CGT purposes of £11,000 in the tax year in which the gain was made (the tax year 2014/15) – see Section 3(2) of the TCGA, as substituted by Section 8(1) of the Finance Act 2014.

For the reasons set out above, we determine Issue One in favour of the Appellant. We have concluded that none of the gains which were made by the Appellant on the Properties is subject to CGT and therefore that the appeal against the Closure Notice and each Discovery Assessment should be upheld.