Deloitte comments on Chancellor’s announcement on private residence CGT relief

Patricia Mock, tax director at Deloitte, comments on today’s announcement on private residence capital gains tax relief:

“Today’s Spring Statement notes that a consultation will be published in the coming months on the changes to private residence capital gains tax relief which were announced in the 2018 Budget. The proposals were to reduce the final period exemption, and to restrict lettings relief - the additional relief if a main residence has been let - to cover only periods in which the owner has been occupying the property with the lodger. Both changes are planned to apply to disposals from 6 April 2020 onwards.

“Private residence relief exempts a gain on the disposal of a property which has been occupied by the taxpayer as their only or main home. If the property has not been occupied for the whole period of ownership then only part of the gain is exempted. Relief applies to the final period of ownership whether or not the property has been occupied, and this is to allow taxpayers time to sell their old house when moving. Budget 2018 proposed a reduction in this period from 18 to 9 months, subject to minor exceptions.

“The publication of the consultation will enable us to see whether the intention is for the changes to apply as planned. If so they will affect those who have moved out of their property more than nine months before it is sold at a gain, and any homeowners who have moved out to rent their property before selling at a gain.

“It’s worth noting that a similar ‘shared occupancy’ requirement for rent-a-room relief, which provides that up to £7,500 of rent can be received by a taxpayer in respect of their own home, was to apply from 6 April 2019 but was dropped from the most recent Finance Act. This was apparently to maintain simplicity, and may be revived along with the capital gains proposals.”

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