The Capital Gains Tax (CGT) consultation on Private Residence Relief (PRR) and on changes to ancillary reliefs is now closed. The consultation ran from 1 April 2019 until 1 June 2019.
Historically, PRR has been a very useful way to reduce the taxable gains arising from the sale of a residential property that has been let but which has, at some point, been occupied by the owner as their primary residence.
In the 2018 Budget, the government announced two relief changes which it claimed would aim PRR at owner-occupiers.
The proposed changes are planned to take effect from the 6 April 2020, and are as follows:
- The final period exemption will be reduced from 18 months to nine months. However, owners with a disability and those in care will retain a 36-month final period exemption.
- Lettings relief will be reformed so that it only applies in cases where an owner is in shared occupancy with a tenant.
PPR has been an important device to help homeowners mitigate or even eradicate a charge to CGT on a residential property that had been their one-time home. Unfortunately, if the government gets its way, the tax mitigation power available to PRR where it is in point will be greatly diminished.
We will provide more information on the results of the consultation once it becomes available.