One of the announcements to come from the Chancellor’s Autumn Budget last year was planned reforms to lettings relief.
Specifically, the Government announced proposals to change Private Residence Relief on Capital Gains Tax upon the sale of a property.
From April 2020, lettings relief will only apply in circumstances where the owner of the property is in shared occupancy with the tenant, in other words it will be abolished for non-resident landlords, selling properties they had previously lived in.
As well as this reform, the final period exemption is also set to be reduced, from the current 18 months to 9 months, with the Government adding that they plan to consult on these changes.
However, there won’t be a change to the 36 months final exemption period, which is available to disabled people or those in a care home.
A consultation has been launched inviting the views of landlords on these plans, and the closing date for comments is 1st June 2019.
What is lettings relief?
Currently, people who rent out a property which was previously their main residence are eligible for lettings relief.
Lettings Relief is a policy which reduces the amount of capital gains tax paid on the sale of a property. If you qualify for Private Residence Relief and have a chargeable gain, you may also qualify for Letting Relief. This means you’ll pay less or no tax. You can learn more about this here.