PPR and Lettings Relief: an Update

Shortly following the last autumn budget, I published a blog “CGT Reliefs – Hit with Both Barrels!”, regarding the changes announced to the Principal Private Residence Relief (PPR) and letting relief rules.

HMRC have now published a consultation document, which can be found here:

https://www.gov.uk/government/consultations/capital-gains-tax-private-residence-relief-changes-to-the-ancillary-reliefs

The consultation period closes at 11:45pm on 1 June 2019.  The document gives further details about the proposed changes and how they will impact the Capital Gains Tax position in the event of a sale, including worked examples.

The two main changes are:

• The final period exemption will be reduced from 18 months to just 9. Please note that this change does not affect the relief available for those who move out of their homes and into residential care; the relief in this situation remains at 36 months.

• The reform will limit the availability of lettings relief and restrict it only to those who share occupation of the property with a tenant.

The above changes apply for all disposals made on or after 6 April 2020.

The HMRC consultation sets out the government’s proposals in more detail, and invites views and comments on how the planned changes will work in practice.

Other Changes

The consultation document also proposes three technical changes relating to the armed forces, legislating extra-statutory concessions and, finally, additional changes to the rules surrounding inter-spouse transfers, and the inheritance of the PPR past history in these circumstances.

In addition to the above changes, taxpayers are also faced with the reduction to the tax payment window for residential property gains, to just 30 days from completion, for disposals from 6 April 2020. Further details can be found here: https://www.gov.uk/government/publications/capital-gains-tax-and-corporation-tax-on-uk-property-gains/capital-gains-tax-payment-window-for-residential-property-gains .

Please speak to your usual W&P contact for any further information or guidance.

Disclaimer - All information in this post was correct at time of writing.