Capital gains tax break for job-related accommodation
You’re in the process of selling a property that you bought as your home but because of your job have never lived in. You’ve been told that you’ll have to pay tax on any gain you make, but might a special relief get you off the hook?

PRR basics
You’re probably familiar with private residence relief (PRR), which provides the majority of people with relief from capital gains tax when they sell their main home. What you may not know is that in some circumstances PRR can apply to capital gains made from the sale or transfer of a property that you no longer live in because your employer provides you with job-related accommodation.
PRR can even apply if you never live in a property as your home but you intended to. Before looking in detail at when this can apply we need to consider what’s meant by “job-related accommodation”.
What is job-related accommodation?
Accommodation is job-related if it’s provided by your employer because of your or your spouse’s employment and any of the following apply:
- occupation is necessary for the proper performance of your/your spouse’s job; or
- so you/your spouse can perform your work better and it’s customarily provided for the type of job you do; or
- as part of special security arrangements.
Examples of job-related accommodation are pub managers, ministers of religion, farm workers and caretakers. Accommodation is job-related where it’s provided to headteachers of boarding schools and others whose responsibilities extend beyond the normal school hours, e.g. house masters. In other words, they must meet either the first or second of the three conditions above.
Tenancy not terms of employment
Job-related accommodation that you occupy under a tenancy agreement rather than under the terms of your employment counts as your residence for the purpose of PRR. What’s more, if you live in it most or all of the time it will be your main residence. This prevents the property you own from qualifying for PRR. However, you can get around this. You can elect to treat your property as your main residence even though you live in the job-related accommodation.
Letting your intended home
PRR isn’t necessarily lost on your property if you let it while you’re living in job-related accommodation but you need to take care when creating a lease or rental agreement. If the lease ends later than the date you expect to leave your job-related accommodation, this indicates to HMRC that you didn’t intend to use the property as your home.
Evidence of intention
Now that we’ve explained how job-related accommodation can affect PRR we need to look at what steps are required to claim it if you make a gain from selling your intended home before you lived in it. HMRC’s guidance doesn’t appear to be useful as it’s solely devoted to scenarios that might disprove your intention. Indirectly, this is helpful. It means that if you avoid the circumstances it gives for when HMRC might refuse your claim, e.g. you bought the property after accepting a job which comes with accommodation, there’s no realistic argument it can offer against your intention.
-
Should you revoke your 20-year-old option?
Your business has let out a building to a tenant and it is now just over 20 years since you opted to tax the property with HMRC. Should you revoke it so that your tenant no longer needs to pay VAT?
-
Chip shop owner fined £40k for hiring illegal worker
A Surrey fish and chip shop owner has been left in shock after being fined £40,000 for allegedly employing someone who didn’t have the right to work in the UK, even though he conducted a right to work check. Where did this employer go wrong and what can you learn from it?
-
Increase the IHT-free part of your estate by 50%
Your father died leaving his entire estate to your mother who later remarried. You’ll inherit some or all of her estate depending on whether she dies before her husband. What steps can be taken to reduce the inheritance tax (IHT) on the estate?