Capital gains tax (CGT) changes come into force 6th April 2020 and are set to affect most private residential Landlords. In its simplest terms, CGT is paid on profits made through the sale of any property which is not your main home, calculated by deducting any private residence relief and lettings relief from the capital gained on that sale. For Landlords, under current regulation, if you lived in the non-main residence property and subsequently let that property, you may claim ‘lettings relief’. So CGT is not paid on the years lived at the non-main residence property plus the final exemption period i.e. the last 18 months of ownership regardless of who resides at the property during those last 18 months.
At the time of writing this article we understand that from April 2020 ‘lettings relief’ is no more unless a Landlord can demonstrate they shared residency with their tenant. A rare set up. The 18 month final exemption period is reduced to 9 months and the CGT is payable within 30 days of the sale, not the end of the next tax year. This tax relief change will impact the tax year 2020/2021 onwards and has implications for the buy to let Landlords, accidental Landlords, sale of land, business premises and inherited properties.
CGT liability and relief can be a complicated matter and Alexandre Boyes always recommend sellers and Landlords seek professional advice. For further information you can read the Governments guides on CGT here and here.
