Summary
A gain on the disposal of a flat, which was owned by the taxpayers and occupied by a relative who had previously sold the property to them, was eligible for main residence relief as ‘settled property’ under TCGA 1992, s 225.
Background
The taxpayers, husband and wife, sold a flat during 2006/07, realising a capital gain. They claimed capital gains tax (CGT) relief under TCGA 1992, s 225 (‘Private residence occupied under terms of settlement’), on the basis that their ownership of the flat was subject to a trust, and that the flat was settled property which qualified for relief under that section. HMRC refused the claim, and the taxpayers appealed.
The flat was previously owned by the husband's mother, Mrs W. She sold the flat to the taxpayers in February 1996 for £45,000, being an arm's length valuation. The sale was subject to
