In recent years we have seen a tightening of reliefs for those people with second homes which they let. In the recent budget the focus shifted to those people selling or letting their main residence.
Some key points are:
- Previously recognition that our home may take a while to sell and that we should not pay tax during this period has been given by exempting the last 18 months of ownership. For disposals made from April 2020 this period reduces to just 9 months. This could be important if you are struggling to sell your property.
- Many people let their main home, whilst overseas for example, and receive letting relief for that period of up to £40,000 which reduces any gain for the period the owner is not in residence. Whilst this proposal will be consulted on by HM Revenue & Customs (HMRC), it is currently anticipated that letting relief will be restricted to periods during which the owner shared occupancy of the property with the tenant. This change will have a significant impact for people who have made plans around this relief.
- From 6 April 2020 all capital gains tax due on UK residences (including buy-to-let and furnished holiday letting properties but not main residence’s), will become payable within 30 days of completion. This will accelerate the tax payment and there may be penalties for late notification to HMRC.
These new proposed rules underline the importance of talking to your tax adviser before implementing your plans to ensure these are not ruined by HMRC.
If you wish to discuss this further or have any questions please contact Diane Nettleton, firstname.lastname@example.org.