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Autumn Budget 2018 – Private Residence Relief

Source: HM Revenue & Customs | 31/10/18

As a general rule, there is no Capital Gains Tax (CGT) on a property which has been used wholly as a main family residence. This relief from CGT is commonly known as Private Residence Relief. Conversely, an investment property that has never been used as a main residence will not qualify.

Two changes to the way Private Residence Relief works were announced as part of the Budget measures. The Chancellor confirmed that two ancillary reliefs are to be amended, potentially reducing the amount of CGT relief available on the sale of a relevant property.

  1. Currently, if a property has been occupied at any time as an individual’s private residence, the last 18 months of ownership are disregarded for CGT purposes. This relief applies even if the individual was not living in the property when it was sold. From April 2020, this final exempt period will be reduced from 18 months to 9 months. There will be no change to the 36 months exempt period available for those that are disabled or moving into care homes.
  2. Home owners that let all or part of their house may not benefit from the full Private Residence Relief but can benefit from letting relief of up to £40,000 (£80,000 for a couple). From April 2020, lettings relief will be reformed. This change means that lettings relief will only be available to those property owners who are in shared occupancy with a tenant.

The Chancellor also announced a change to the CGT rules on the sale of a residential property. Going forward, if CGT is due, a payment on account will be required. The new rules will apply from April 2019 for non-UK residents and April 2020 for UK residents. This change will mainly affect individuals who are disposing of a second home or rental property. However, there will be exceptions including the limitations to Private Residence Relief mentioned above which result in CGT falling due, and for non-residents.

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Some accountancy websites also provide pages and pages of tax information, helpsheets, etc. We prefer to give clients personally tailored advice. So, if you want details of tax rates and allowances just go to the HMRC website on which you should find what you’re looking for. If you need more individual advice please contact us.

Below are links to websites you may find of interest, but as we like to support our local community and clients, we have included links to websites that may be of interest:

HMRC

FT

BBC

VEALE WASBROUGH VIZARDS

CESP

PRACTICE INDEX

SIMCOMM ACADEMY

More Local:

FOOTPLATE EXPERIENCE

ANGLEBURY PRESS

OFFCAMBER.CO.UK

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