CG64311 | Private residence relief: the entity of the dwelling-house: part of the building let

Statement of Practice (SP14/80) clarifies the position where the owner of a dwelling-house lets part of it as residential accommodation.

The statement of practice says that where the owner of a dwelling-house lets a room to a lodger and that lodger lives as a member of the owner’s family, sharing their living accommodation and taking meals with them, no part of the dwelling-house should be treated as having ceased to be occupied as the owner’s residence and therefore private residence relief should not be restricted.

It goes on to say that where the owner of a dwelling-house lets part of the dwelling-house as a flat or a set of rooms without any structural alterations being made to the property it will be accepted that the part let was part of the owner’s dwelling-house. However, in these circumstances private residence relief will be restricted in respect of the part that was let as it had ceased to be occupied as the owner’s residence. Although a separate lettings relief under s223(4) TCGA92 may be available (see CG64230+).

However, if the owner of the dwelling-house lets part of the dwelling-house as a self-contained flat which for example is accessed separately to the main house, the self-contained flat will itself be treated as a separate dwelling-house.

Therefore, where part of a dwelling-house has been let it is important to establish to what extent the accommodation has been let as this may affect the amount of private residence relief and/or lettings relief due.