Thinking about selling your home?

Are you considering selling a residential property that has been your previous home? Then you should read our update below on Principal Private Residence Relief (PPR) and associated lettings relief for Capital Gains Tax (CGT).

Last year’s Autumn Budget relayed proposals around changes to Principal Private Residence Relief (PPR) and associated lettings relief for Capital Gains Tax (CGT). These proposals have recently been further developed in the draft Finance Bill, due to take effect from April 2020, and things are going to become more difficult for those looking to sell their property.

The main idea behind the two reliefs is that CGT is not payable for the period in which the taxpaying individual lives in the property as their main residence, with further relief available under certain circumstances, most notably at the end of the period of ownership regardless of occupancy and if the property has been let. However, these two additional reliefs are now under further review as part of the proposed changes.

The key changes being proposed are:

  • Reduction of the period eligible for PPR relief on qualifying properties at the end of ownership from the final 18 months to 9 months. This is a further reduction from the original 36 months, which was reduced to 18 months back in April 2014, but with exemptions remaining for those with certain disabilities or moving into care, who will still be eligible for 36 months.

  • Restricting lettings relief to periods where the homeowner is in “shared occupancy” with a tenant. This effectively rules out periods where the homeowner does not live in the property and is letting to a third party.

If you are considering selling a residential property which has been your home, these proposals could seriously affect you. This will include those who are relying on the current 18 months exemption and those with large periods of letting, where disposals before 6 April 2020 would be beneficial. In other circumstances, it may be possible to utilise additional reliefs that are still available to mitigate any loss from the changes. 

Looking for more personal tax updates? Read our latest Quarterly Tax Digest

If you are thinking about selling a property and worried about how these changes may affect you please fill out the form below to get in contact with a member of our Private Client team.

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