The clause is straightforward and welcome. It addresses the situation of a private dwelling house in which an adult placement carer is living. At present, an individual who owns a dwelling house that has been his or her residence for some time is entitled to private residence relief from capital gains tax when they dispose of the property. That means that if it has been categorised for capital gains tax purposes as their only—or their main—home, they will not have to pay capital gains tax when they sell it. There are certain limitations to that. If the house has been occupied as the sole or main residence for only part of the period of ownership, it is possible that the profit on disposal would be partly taxed. If part of the property has been used for other purposes during all or part of the period of ownership, any gain on the whole house will be apportioned accordingly. For example, if it was assessed that someone had used 50% of a property as their only or main dwelling house, they would not have to pay capital gains tax on 50% of the profits, but if the other half of the property had been used for another purpose—for example if it had been sub-let—they might have to.
That raises a problem for adult placement carers, who provide accommodation and support to adults in need of care who are placed in their properties. That is obviously something important that we want to encourage, because people in that situation might well prefer to be placed in someone’s private residence, rather than in a larger facility that is shared with others. Such people might have become unable to continue living in their own homes. However, it is possible that the arrangement could give rise to a capital gains charge because part of the property could be deemed to have been used for semi-commercial purposes.