There are a couple of HMRC proposed changes to the Capital Gains Tax Principal Private Residence relief announced in the last budget that may apply from 6th April 2020. The budget announcement has put the proposals out to ‘consultation’ so there is no guarantee that the changes will come into effect, but we should watch out for any announcements.
In summary the proposals are:
- At the moment the final period of ownership which is deemed to be a period of occupation (regardless of actual occupation) is 18 months. The proposal suggests that this should be reduced to 9 months.
It is worth noting that the proposal would not affect those in or moving into care homes and people with a disability where the final period exemption is preserved at 36 months.
- The other proposal is in respect of relief for letting property which has also been the main residence in the period of ownership. This is currently capped at £40,000 per person and is available provided the property, which is let, has, at some time in the period of ownership, been the only or main residence.
The proposal is to introduce a shared occupancy condition (which is not currently the case). So that relief will only be available if the property is let at the same time as the owner remains in occupation.
Consultation does more often than not move on to be put into effect, we cannot be certain, but prepare for these changes from 6th April 2020
