Feb 19, 2020

Property owners should be aware of changes in the tax rules relating to the sale of residential property, which come into effect from 6 April 2020. Regardless of whether or not the 11 March Budget announcement goes ahead after the sudden resignation of Chancellor Sajid David, there are still 3 main property tax changes which will take effect:-

1. Increased frequency of Capital Gains Tax reporting

Tax Director, Chris Regnauld explained: “Capital Gains must still be reported on your self-assessment tax return by 31 January following the end of the tax year. But any tax paid on account under the new ‘30-day return’ will be taken into account when arriving at the final liability for that year. One way round this,” said Chris, “would be to unconditionally exchange contracts if at all possible, before the 6 April 2020.

2. A reduction in the final exemption period

“This property tax change could potentially impact those who do not occupy their previous main residence during the period leading up to sale,” said Chris. “Under the current property tax rules, the last 18 months of ownership is always exempt from CGT, as long as you have lived in the property as your main residence at some point during your period of ownership. This exemption period is now being reduced to just 9 months.”

3. Lettings Relief to be restricted

“This property tax change is slightly more complicated. At the moment, when a residential property which is rented out is sold, but crucially has at some point been the main residence during ownership, a claim could be made for lettings relief for the period during which the property was let. However, under new property tax rules, lettings relief will no longer apply – unless you have lived in the property at the same time as a rent paying lodger. Therefore, I suppose we can now refer to it as a lodger relief.”

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