HMRC is consulting until 1 June 2019 on changes announced at Budget 2018 and taking effect from April 2020, which reduce the final-period exemption from 18 months to 9 months and limit lettings relief to circumstances where owners are in shared occupancy with their tenants. The consultation also considers changes to other ‘ancillary’ aspects of the private residence relief rules.
The purpose of the changes is to ensure the reliefs are properly targeted at owner-occupiers.
The final-period exemption currently means that where a property has been occupied as the owner’s only or main residence, the final 18 months of ownership always qualifies for relief regardless of the property’s use. The 36-month final exemption for disabled persons and those resident in a care home will not be affected by the changes.
Lettings relief applies where part, or all, of a main residence is let as residential accommodation, and is currently available for the lower of:
private residence relief already calculated;
£40,000; or
the chargeable gain relating to the letting.
Lettings relief will not be available after April 2020 for periods where owners move out of the property and no longer share occupation with tenants, unless covered by one of the ancillary reliefs, such as job-related absences.
The three other changes being considered include:
extending job-related accommodation relief to service personnel in accommodation not technically provided by the MOD, but rented in the private sector as part of the MOD’s future accommodation model (FAM) pilot due to take place in 2019;
legislating for ESC D21, which allows an extension of the period for individuals to nominate one property as a main residence, where they have an interest in more than one property having only a negligible capital value, and they were unaware that such a nomination could be made;
legislating for ESC D49, which allows for short delays in taking up residence, such as where an individual acquires land on which they have a house built, or have alterations or redecorations carried out before moving into a property purchased as an only or main residence; and
reforming the rules on spouse/civil partner transfers, which currently allow the receiving spouse to count any period where the residence was occupied as a main residence by their spouse as their own, and instead treat the receiving spouse as having inherited the ownership period and the use to which the property had been put in the past, regardless of whether it is a main residence at the time of transfer.
Following this consultation, the government expects to publish its response and draft legislation in the summer. See bit.ly/2VhzJii.
HMRC is consulting until 1 June 2019 on changes announced at Budget 2018 and taking effect from April 2020, which reduce the final-period exemption from 18 months to 9 months and limit lettings relief to circumstances where owners are in shared occupancy with their tenants. The consultation also considers changes to other ‘ancillary’ aspects of the private residence relief rules.
The purpose of the changes is to ensure the reliefs are properly targeted at owner-occupiers.
The final-period exemption currently means that where a property has been occupied as the owner’s only or main residence, the final 18 months of ownership always qualifies for relief regardless of the property’s use. The 36-month final exemption for disabled persons and those resident in a care home will not be affected by the changes.
Lettings relief applies where part, or all, of a main residence is let as residential accommodation, and is currently available for the lower of:
private residence relief already calculated;
£40,000; or
the chargeable gain relating to the letting.
Lettings relief will not be available after April 2020 for periods where owners move out of the property and no longer share occupation with tenants, unless covered by one of the ancillary reliefs, such as job-related absences.
The three other changes being considered include:
extending job-related accommodation relief to service personnel in accommodation not technically provided by the MOD, but rented in the private sector as part of the MOD’s future accommodation model (FAM) pilot due to take place in 2019;
legislating for ESC D21, which allows an extension of the period for individuals to nominate one property as a main residence, where they have an interest in more than one property having only a negligible capital value, and they were unaware that such a nomination could be made;
legislating for ESC D49, which allows for short delays in taking up residence, such as where an individual acquires land on which they have a house built, or have alterations or redecorations carried out before moving into a property purchased as an only or main residence; and
reforming the rules on spouse/civil partner transfers, which currently allow the receiving spouse to count any period where the residence was occupied as a main residence by their spouse as their own, and instead treat the receiving spouse as having inherited the ownership period and the use to which the property had been put in the past, regardless of whether it is a main residence at the time of transfer.
Following this consultation, the government expects to publish its response and draft legislation in the summer. See bit.ly/2VhzJii.
