CGT: Changes proposed for PRR

HMRC want to better focus the Private Residence Relief (PRR) by ensuring that those gains or losses that arise when a person sells or otherwise disposes of a dwelling that has been used as that person’s only or main residence is kept outside of the realm of Capital Gains Tax. Since its
inception in 1965 it provided a protection that homeowners who legitimately occupied their properties will not be hit with a tax bill in the event they sell and move on to another property for whatever reason.

The proposed changes are as follows:

  • Reducing the final period exemption from 18 months to 9 months;
  • Restricting lettings relief to periods where the property owner is also in occupation;
  • Adjusting the rules for giving PPR where the property has been transferred between spouses;
  • Legislating for extra statutory concessions: D 21 (late claim for main residence) and D49 (delay in moving into a property); and
  • Extending the PPR relief for job-related accommodation to military service personnel, where the accommodation is not owned by the MOD.

Lettings relief will no longer apply for periods where the whole house is let, which will hit “move and let” landlords.

These changes are all expected to come into effect for disposals made on and after 6 April 2020.

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