The latest Finance Bill includes important changes to private residence relief that took effect from 6 April 2020.

  • The first change is to limit to just 9 months the period prior to disposal that counts as a period of deemed occupation and thus exempt from CGT even though the owners are not living in the property during that period
  • The second is to limit “letting relief” to periods where the taxpayer is in shared occupation with the tenant.

Final period exemption now reduced to 9 months

The final period exemption was for many years the last 36 months which was felt to be too generous. The period was then reduced to the last 18 months and has now been further reduced to the last 9 months.

The final period exemption will remain at 36 months for those with a disability, and those in or moving into care.

CGT Lettings Relief Changes

Lettings relief provided a further exemption for capital gains of up to £40,000 per property owner.

The additional relief was introduced in 1980 to encourage people to let out spare rooms within their property on a casual basis without losing the benefit of PRR, for example where there are a number of lodgers sharing the property with the owner. It no longer applies where property owners rent out their former main residence.

Those who are renting their property temporarily whilst working elsewhere are unlikely to be affected by this change as there are alternative reliefs available under those circumstances.

Disclaimer Notice

The information contained in this  article is for general information purposes only and does not constitute advice, Whilst we endeavour to keep the information up-to-date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability for a particular purpose. We recommend that professional advise should be taken from a suitably qualified expert before undertaking any action.

CategoryCovid-19
Subscribe to our newsletter

© 2019 Shaikh & Co is the trading name of Shaikh & Co Limited a company registered in England and Wales Company Number 10372642 VAT Number 262993664.

Shaikh & Co