Setting up multiple companies to separate business interests can seem very straight forward. There are however important considerations. We explore the implications of owning too many companies.
Eyre v HMRC: Securing Full PPR Relief – Key Lessons & Pitfalls to Avoid
18 September 2025
Accounting & Compliance, Property Investors & Developers, Property Owners, Reducing Tax
PPR relief (principal private residence relief) is probably one of the most valuable tax reliefs available to UK homeowners.
It is pretty fundamental because it ensures that when we sell our main residence we don’t need to pay capital gains tax on the profits generated.
There has been speculation that the Chancellor, Rachel Reeves, may revisit PPR relief in the upcoming Autumn 2025 Budget.
Any restriction would be controversial and damaging to the housing market.
With stamp duty already at record levels, further taxes on property sales could stall transactions.
We wait to see if there will be any changes.
Assuming nothing changes – fingers crossed – it’s important to understand this important relief.
A recent case which the taxpayer won at the First-Tier tribunal highlighted some of the key issues in respect of how HMRC view the availability of this relief.
The Eyre Case
A recent First-Tier Tribunal case, Eyre v HMRC (TC/9498), shows how complex PPR relief can become.
The background
Raymond and Diana Eyre bought a property in Chelsea for £9.75m in 2010.
They demolished it, built a new home, and completed it in July 2013.
Just months later, in February 2014, they sold it for £27m.
HMRC’s view
The tax office argued the Eyres weren’t selling a home but running a property trade.
They claimed the project was an “adventure in the nature of a trade” and issued seven-figure income tax assessments.
The appeal
The Eyres disputed HMRC’s assessment and appealed to the First-Tier Tribunal.
The central question was whether the Chelsea property had genuinely been their main residence, or whether the project was really a property development for profit.
HMRC’s “Badges of trade”
In their argument HMRC relied on the well-known ‘badges of trade’ set out in Marson v Morton (1986) to support their case:
- whether or not it is a single transaction (a one-off transaction is in law capable of being an adventure in the nature of a trade, although the lack of repetition can clearly be a pointer to something different)
- whether the transaction is in some way related to the trade which the taxpayer otherwise carries on
- the nature of the subject-matter
- whether the transaction was carried through in a way which was typical for a commodity of that nature
- the source of finance for the transaction
- whether work was done on the item for the purposes of resale
- whether the item purchased was resold in the same single lot as when it was bought or whether it was broken down into separate saleable lots
- the intention as to resale at the time of purchase, and
- whether the item provided enjoyment for the purchaser or pride of possession or produced income pending resale.
The above is not a definitive listing of factors but according to the judge in the Marston v Morton (1986) case “common sense guidance”.
The Tribunal’s Decision
The FTT however found in favour of the Eyres on the following grounds:
Genuine Occupation
The Eyres moved into the property once construction was completed (July 2013) and lived there until they sold it in February 2014.
Despite being for a relatively short period the FTT found their occupation to be genuine and substantial.
The key here is the quality of occupation—the Eyres treated the property as their home, furnished it and integrated into the local community.
Intention to Make It Their Main Residence
The Eyres demonstrated clear intent to make the property their main residence, with no evidence of trading intentions.
In the case there are a number of great examples of the personalisation of the property such as the marble chosen for the swimming pool and gym area and a bespoke wine cellar to showcase the wine collection.
The Eyres argued that the works done were specific to them and not for the purposes of resale.
Clearly a basic redevelopment with no personalisation would have acted against them.
The fact that they owned another property (Holland Park), which they put on the market, further supported their claim that the Chelsea property was meant to be their permanent home.
No Evidence of Trade
The FTT ruled that the Eyres’ activities were residential rather than commercial.
Even though the property had been demolished and rebuilt, and sold for a profit, the lack of a pattern of similar transactions and the personal nature of the redevelopment (not for resale or profit-making) meant the transaction wasn’t considered a trade.
As part of this they considered the fact that the Eyre’s business of aircraft leasing was unrelated.
A Missed Argument by HMRC
One point HMRC did not use was section 224(3) of the Taxation of Chargeable Gains Act 1992.
This rule allows HMRC to deny relief where a property is bought mainly to realise a gain.
Although not raised in this case, it remains a risk factor to watch.
What this means for you
The Eyre case is extreme in value, but the principles apply to anyone selling a home.
PPR relief is not guaranteed. HMRC is more likely to question it if:
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You live in the property for only a short time.
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You make a large profit on sale.
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The redevelopment looks more like a commercial project than a personal home.
The key to protecting your claim is evidence.
Show genuine occupation, prove your intent to live there long-term, and document personal use of the property.
Summary
PPR relief protects millions of homeowners from paying unnecessary tax.
But as the Eyre case shows, HMRC won’t hesitate to challenge if they think a property sale looks more like trading.
If you’re planning to build, redevelop, or sell — especially with high-value properties — get advice early.
The right preparation can make the difference between a tax-free sale and a costly dispute.
Getting the right advice
We work with property investors and developers every day, helping them safeguard tax reliefs and avoid unexpected bills.
If you need assistance with your property project call us on 01634 731390 or book a free discovery call today.
Our services
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Blogs related to Property Tax
Take a look at our other blogs on the topic of property taxes
Key Considerations When Selling Part of Your Principal Private Residence
The content in this blog is correct as at 18th September 2025. See terms and conditions.
