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Letting exemption for CGT purposes

Changes ahead

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Hi folks,

My client is considering selling a property which is currently rented out. Ownership of 19 years with 7.5 years as PPR (including last 18 months).

Based on my numbers, PPR reduces net gain by 7.5/19 and letting relief does the same (PPR is lower than £40k).

This means letting relief still works very well to reduce gains on residential property, but am I right in that this is changing from April 2020 to include only property where there is shared occupation?

Replies (7)

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By Duggimon
09th Jul 2019 14:14

That is the proposed change, yes. I don't think it's been enacted yet though, the consultation period only ended last month and I don't think anything else has come out since.

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By gainsborough
09th Jul 2019 14:16

At the moment, yes. The proposals were to change the last 18 months exemption to 9 months and remove the letting exemption for non-shared occupation from April 2020.

The consultation for the above closed on 1st June and HMRC's website advises that people should check back to see the outcome when it is published. We won't know whether the above proposals are final until this happens.

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By lionofludesch
10th Jul 2019 08:30

Are we not asking what's in the next Budget here ?

We'll have to wait and see, I suppose.....

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Replying to lionofludesch:
By Wilson Philips
10th Jul 2019 10:11

To be fair, the specific changes (and consultation) were announced in the 2018 Budget:

"To better target private residence relief at owner occupiers, from April 2020 the government will reform lettings relief so that it only applies in circumstances where the owner of the property is in shared occupancy with the tenant. The final period exemption will also be reduced from 18 months to 9 months. The government will consult on these changes."

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By petestar1969
31st Oct 2019 15:54

I thought the change from 18 months to 9 months was already in place?

I have a related question.

If a property held in joint names qualifies for PPR but was also let out do the owners each get a £40k letting exemption, or is it £4ok for the property so £2ok each? Assuming, of course, there is enough gain that two lots of £40k were needed.

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Replying to petestar1969:
By Wanderer
31st Oct 2019 15:59

£40k each.

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Replying to Wanderer:
By petestar1969
31st Oct 2019 16:41

Wanderer wrote:

£40k each.

Thank you

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