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The fall of the House of Ussher
Regular readers may correctly infer that the writer has been waiting his entire professional career to use this title!
Kitty Ussher’s ten-day tenure as the Exchequer Secretary to the Treasury has been brought to an end with the disclosure that she apparently saved CGT on a property by having it treated for a short period as her only or main residence. Ironically the Press has speculated that, had she remained in her previous ministerial role, she would have kept her job.
But what exactly has Miss Ussher done? Er... nothing more than undertake simple planning which is expressly outlined in HMRC’s guidance manuals (CG 64510) and which ought to be regarded as routine (though our experience is that it is still too often overlooked). Namely, she has – as the owner of two homes – elected that one of them which is not in fact her main residence shall be treated for tax purposes as if it were. The result is that, however short may be the period for which the election remains in force as regards the property (the example in the HMRC guidance is of just one week), CGT exemption is afforded in relation to at least the last three years of ownership. In Miss Ussher’s case this seems to have been enough to exempt the gain altogether, as it often will.
The key point, which we have mentioned before but which we make no apology for mentioning again, is that the election must be made (if at all) within two years of the acquisition of the second home – or, more generally, within two years of the date on which the number of homes changes: once made it may be varied at any time. Less obviously, this means that an election lapses on the acquisition of each third or subsequent home or indeed on the disposal of any such home; and a fresh election should therefore be made on each such occasion.
For further advice on this please contact Terry Jordan on 020 8922 9360 or terry.jordan@bkltax.co.uk. (And yes, we await only some taxation matter bearing on the "The Masque of the Red Death" to make our joy complete...)
