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Detail of outcome
This document summarises the responses received to the consultation on the changes announced at Budget 2018 to some of the ancillary reliefs in private residence relief in CGT. These changes primarily relate to lettings relief and the final period exemption. The document also outlines the government’s next steps regarding these changes.
Following this consultation, the government has published draft legislation, an explanatory note and a tax information and impact note (TIIN).
Private Residence Relief (PRR) is designed to keep out of Capital Gains Tax (CGT) those gains or losses that arise when a person sells or otherwise disposes of a dwelling that has been used as their only or main residence.
This relief is supplemented by ancillary reliefs that aim to deal with other situations where imposing CGT would lead to undesired outcomes. The government remains committed to this policy.
The government is also committed to keeping the tax system under constant review to ensure that any reliefs and exemptions are properly targeted.
In line with both those ongoing commitments, at Budget 2018, the government announced that 2 of the ancillary reliefs would change to better target PRR at owner-occupiers:
- the final period exemption will be reduced from 18 months to 9 months, although the special rules that give those with a disability, and those in care, an exemption of 36 months will not change
- lettings relief will be reformed so that it only applies where an owner is in shared occupancy with a tenant
These changes will take effect from 6 April 2020.
This consultation sets out the government’s proposed changes in more detail, and invites views on how they will work in practice. It also invites views on some technical aspects of the PRR rules.