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Principal Private Residence Relief in practice – extra statutory concession D49



Extra statutory concession D49 (ESC D49) is the catchy title for an exception given to those who are looking to take advantage of the Principal Private Residence tax relief on gains made when disposing of a residential property. The concession applies where there is a short period between someone acquiring a piece of land and then taking up residence in a dwelling house on that land.

A recent case highlighted how the taxman will deal with applications for this relief in certain circumstances.

The facts

Mr & Mrs White purchased four interests in land at various dates during 2001 and 2002 which they converted into a single dwelling. Occupation took place between September and November 2003 and the couple applied for Principal Private Residence Relief for this period under extra statutory concession (ESC) D49. ESC D49 specifically deals with short delays of up to two years where an owner/occupier is unable to take up residence.


HMRC argued that the date of acquisition, where a property is acquired in stages, is set at the point that an unconditional contract is achieved for the first part of the purchase, in this case 11 June 2001. As occupation did not commence until September 2003 (the earliest possible point in time) and therefore a period of two years and three months; this was outside the maximum two-year time frame permitted by the concession. Therefore, the period cannot qualify for principal private residence relief.

Extra Statutory Concession D49

The concession allows for relief for a period of up to 12 months, although where there are reasonable grounds for the period exceeding 12 months i.e. out with the taxpayer’s control, the period may be extended up to two years.

The relief is available for the period between the acquisition of the land and occupation of a dwelling house, under the following circumstances:

  • Where the delay in taking up residence is because a dwelling house is being built on the land.
  • Where the delay in taking up residence is because of the continuing occupation of the previous residence while arrangements are made to sell it.
  • Where the delay in taking up residence is because of alterations or redecorations are being carried out.

From 6 April this concession will be incorporated into Capital Gains Tax legislation.

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If you would like to discuss the Private Residence Relief or any other related matter, please get in touch with a member of our team.

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