Upcoming Changes to Private Residence Relief

Two changes will be coming into play from April 2020 in relation to the relief from Capital Gains Tax relief for private properties.

In general, Capital Gains Tax (CGT) does not apply to a property that has been used wholly as a main family residence. This relief from CGT is commonly known as Private Residence Relief.

There are two changes coming up in the way that Private Residence Relief works, announced as part of the 2018 Autumn Budget and coming into force shortly. Here, we explain what those changes are, and how you may be affected.

Change #1: Final Exempt Period

Current position:

If a property has been occupied as an individual’s private residence at any time, the final 18 months of ownership are disregarded for the purposes of CGT. This applies even if the individual was not living at that property when it was sold.

From April 2020:

This period will be reduced from 18 months to 9 months. Note that this change won’t affect the existing 36 month exempt period available for anyone who is disabled or moving into a care home.

Change #2: Letting Relief

Current position:

If you sell a dwelling house which is, or has been, your only or main residence, and part or all of it has at some time in your period of ownership been let as a residential accommodation, you can benefit from Private Residence Letting Relief of up to £40,000, or £80,000 for a couple, despite not being able to benefit from the full Relief.

From April 2020:

Lettings Relief will be reformed so that it is only available to those property owners who are in shared occupancy with a tenant.

Get in touch with your Warr & Co accountant today to discuss these changes – we’d be happy to offer advice and information.