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Sam
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Category: Tax
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I live in a flat supplied by my employer and am required to

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I live in a flat supplied by my employer and am required to live there (I'm a manager of a sheltered housing scheme and am on call 24 hours / day). I pay my employer rent for the flat. I have recently bought a house that I am renting out to which I intend to retire in about 15 years time. I think this will be CGT exempt as it will, overall, be relieved as being regarded throughout as my principle private residence, due to the necessity of my having to live elsewhere for more work.
For income tax purposes, I imagine I declare all rent received from my house and deduct all the usual property letting costs as if I was letting a second property to my PPR, including mortgage interest. Is there any further relief available because I have to pay rent for my work-related accommodation? Secondly, in order to ensure that I will eventually benefit from CGT relief, is there any election or declaration I should make now?
I imagine that because I am claiming all mortgage interest paid against rent received, the answer to my first question is that there is no further relief available - but I just wanted to check! I look forward to hearing from you and with thanks in advance for any help you may be able to offer. Julie J, Surrey.
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi Julie
Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.
I am afraid your understanding of the capital gains position is not correct, On purchase of this property you have to
1) have lived in it for a period of time as your main then
2) Then have been obliged to live in employer related accommodation
3) return to the property to resume living as your main residence, or be obliged to live somewhere else due to transfer of the employer location.
You have not initially lived in this property so although you do live in job related accommodation, will not fulfil the criteria required for HMRC for capital gains exemption due to this job related accommodation.
Instead you will be treated under the normal capital gain rules, which advise, that is your NEVER live in this property then the whole gain will be subject to capital gains tax, OR if you do then take up residence in this property in the future, will be eligible for private residence relief for the time you actually live in it, and also have consideration for private lettings relief (up to a maximum of £40,000 relief) due to the fact that you let the property out and also it had at some point been your main residence.
Note that Private lettings reliefs also relies on the fact that you have declared all rental income to HMRC.
On the note of the declaration of rental income, yes you are right - you declare the rental income and associated costs - such as interest element of the mortgage repayments, any buildings/landlords insurance, advertising, key cutting, managing agent fees etc)
There is no further relief due to the fact you are n job related accommodation, its treated as a normal UK property rental.
You also cannot make any election to declare this as your main residence, as you have not lived here - and elections can only be made on properties that have been your main residence. on which you wish this to be accepted as so.
Let me know if you have any follow up questions on the information I have provided.
Thanks
Sam
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