A recent tax tribunal decision has shone a spotlight on a critical topic for property owners: what truly qualifies as your Principal Private Residence (PPR)? The case involved a wealthy couple, a high-end redevelopment project, and a £3.3 million tax dispute with HMRC, but at its heart was a much simpler question: Did they really live there?
The Background
In 2010, Raymond and Diana Eyre purchased a property on Burnsall Street in Chelsea for £10 million. They demolished the existing house and built a new, luxurious family home complete with a wine cellar, swimming pool, and gym. By 2014, the Eyres sold the property for just under £28 million - a rather staggering gain.
The couple paid just £17,702 between them in Capital Gains Tax (CGT), claiming the sale qualified for Principal Private Residence relief. HMRC disagreed, issuing CGT assessments totalling over £3.3 million on the grounds that:
The development looked more like a property trading venture, and
Their real PPR was their other house in Holland Park.
But after a lengthy legal battle, the First Tier Tribunal found in the Eyres’ favour.
What Is Principal Private Residence (PPR) Relief?
PPR relief is one of the most valuable CGT exemptions available in the UK. If a property is your only or main residence, you’re generally not liable for CGT when you sell it, provided it genuinely was your home during ownership.
But when you own more than one property, proving which one is your main residence isn’t always straightforward. It's not just about where your name is registered, but about where your life is genuinely centred.
The Key Issues in the Eyres' Case
1. Dual Ownership & the Question of Intent
The Eyres owned two homes - the Chelsea property and one in Holland Park. HMRC argued that the latter was their true residence, pointing out it had never formally been listed for sale. However, the tribunal gave more weight to the Eyres' actual use and occupation of the Burnsall Street property.
2. Demonstrating Permanence
The tribunal noted how the family:
Registered to vote at Burnsall Street
Moved in a 2,000-bottle wine collection
Involved their children in the home’s design
Relocated family belongings and artwork
All of this helped establish the “permanence and intention” required to prove Burnsall Street was their main residence - even if they later sold it.
3. Not a Venture in the Nature of Trade
HMRC’s strongest argument was that the project was commercial, especially since a high-end developer was involved and the couple eventually made a multi-million-pound profit. But the tribunal disagreed, referencing earlier case law (Taylor v Good) which held that a property is not acquired as a trading asset if there’s no present intention to sell.
They found that the Eyres genuinely intended to live in the house, not flip it.
Lessons for Property Owners
This case reinforces some important principles:
PPR is about facts, not just forms. You need to show your main residence is truly your home - not just claim it on your CGT return.
Intent matters and this must be backed up by actions. Your plans, behaviour, and records (like voter registration, utility bills, and moving personal belongings) all help demonstrate intent and permanence.
Be wary when dealing with multiple properties. If you own more than one home, clear documentation and communication with HMRC is key, especially if you change which one is your PPR.
Commercial-style developments may raise red flags. Even if you say a property is your home, significant profit, partnerships with developers, and fast turnarounds may trigger HMRC scrutiny. You must show that the project was personal, not a trade.
Final Thoughts
This case is a strong reminder that PPR relief is not automatic, especially when high-value properties and multiple homes are involved. But with careful planning and proper evidence, even complex property arrangements can stand up to HMRC’s challenges.
If you're unsure how to protect your PPR relief, or if you’re concerned your property plans might trigger CGT, it's worth getting tailored advice from a professional you trust. The stakes can be high, but as the Eyres have shown, the right facts and documentation can make all the difference.
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