A template letter replying to an HMRC enquiry into the disposal of a residential property sold relatively soon (6–12 months) after it was bought, where the taxpayer relies on Private Residence Relief (PRR) because the property was genuinely their only or main home. Drafted for England & Wales (UK tax).
How to use this template, read this first - Replace every
[SQUARE-BRACKET]field before use, and attach evidence. - Private Residence Relief (Taxation of Chargeable Gains Act 1992, ss 222–223) exempts the gain on a property that has been your only or main residence. There is no minimum period of ownership in the legislation, what matters is the quality of occupation (genuine residence with a degree of permanence), not merely how long you lived there. - HMRC may enquire into a quick buy-and-sell because it can indicate either no genuine residence (so PRR is denied and Capital Gains Tax applies) or a property-trading venture (which can be taxed as income). Your reply should explain the genuine residential intention and the reason the home was sold sooner than expected. - Tax enquiries are technical and the stakes can be high, have an accountant or tax adviser review this before sending.
---
[TAXPAYER NAME] [ADDRESS] [UTR / National Insurance No.]
[DATE]
HM Revenue & Customs [OFFICE / ADDRESS as per the enquiry letter]
Dear Sir or Madam,
Re: Enquiry into [my Self Assessment return for [YEAR] / the disposal of [PROPERTY ADDRESS]], reference [HMRC REF]
- I refer to your letter dated [DATE] regarding the disposal of [PROPERTY ADDRESS] (the "Property"), which I purchased on [DATE] and sold on [DATE].
- I claimed Private Residence Relief on the disposal because the Property was my only/main residence throughout my period of ownership. I set out the background below.
- My intention and occupation. I purchased the Property intending to live in it as my permanent home. I moved in on [DATE] and occupied it as my only or main residence until [DATE]. During that time I [registered on the electoral roll at the Property; registered with a local GP/dentist; redirected my post; had utilities and council tax in my name; moved my furniture and belongings in]. I did not own or occupy any other residence as my main home during this period.
- Reason for the sale. I sold the Property sooner than originally intended because of [SET OUT THE GENUINE REASON, e.g. an unexpected job relocation to [PLACE]; a change in family/relationship circumstances; ill health; financial necessity]. This was an unforeseen change; it was not my intention when I bought the Property to sell it quickly, and I did not acquire it as a trading or development venture.
- Evidence enclosed. I enclose [council tax bills, utility bills, bank statements showing the address, electoral roll confirmation, correspondence about the relocation/change of circumstances, removal receipts] to support the above.
- On this basis I believe Private Residence Relief properly applies and no Capital Gains Tax is due on the disposal. I should be glad to provide any further information you require.
Yours faithfully,
_________________________ [TAXPAYER NAME]
Enc: [list of documents]
--- This template is a starting point and not legal or tax advice. Private Residence Relief and HMRC enquiries are technical and fact-sensitive, have a qualified accountant or tax adviser review and adapt this before sending. Governing law/jurisdiction: England & Wales (UK tax).
[DRAFT - requires solicitor/tax-adviser review before use]