Private residence relief

In this lesson

1. 0:00 Private residence relief explained
2. 0:12 Main residence rules and elections
3. 0:40 Calculating the relief formula
4. 1:28 Deemed occupation periods
5. 2:49 Final nine months rule
6. 3:07 Working through the calculation

About this lesson

You'll discover the rules around what counts as occupation—including deemed occupation for absences—and how to calculate the taxable gain if part of your ownership period falls outside relief. This is essential knowledge for TX (Taxation) and ATX (Advanced Taxation), where private residence relief questions frequently appear in both objective tests and case studies. The core concept is straightforward: relief is calculated as the gain multiplied by the period of occupation divided by the period of ownership. However, the detail lies in understanding what "occupation" means. Actual occupation is when you live in the property, but deemed occupation extends this to cover absences up to three years for any reason (provided you lived there before and after), absences up to four years for work-related reasons, and crucially, the final nine months of ownership regardless of whether you occupied it then. The key principle to master is that most deemed occupation rules require the property to have been occupied before and after the absence—though work-related absences have a specific exception if you're prevented from returning. The calculation itself is straightforward once you've identified the periods correctly. Work out your gain as proceeds less cost, establish your total ownership period, then add together all actual and deemed occupation periods. Apply the relief formula, and any remaining gain is taxed at either 18% (basic rate) or 24% (higher rate). Pay particular attention to situations involving job-related accommodation and multiple properties, as these commonly feature in exam questions and require careful application of the election rules.

Duration: 4m