The Government announced in its 2018 budget proposed changes to the application of PPR and lettings relief. These changes are subject to a consultation process but, if implemented, will impact property sales taking place from 6 April 2020 in a retroactive manner.
PPR relief exempts all or part of the capital gain arising on the sale of a property which you have used as your only or main residence. A gain will only arise where you have been absent from the property at some point during your ownership.
Currently, the PPR rules treat the last 18 months of your ownership as a deemed period of occupation regardless of whether you actually resided at the property during this time. However, this deemed period will reduce to 9 months where your property is sold post 5 April 2020. This may act to increase the chargeable capital gain arising on the future sale of the property.
Also, if you have let a property which has at some point been your main residence, you will currently benefit from lettings relief. Lettings relief acts to reduce your chargeable capital gain on sale in relation to let periods. However, for sales taking place post 5 April 2020, it is proposed that lettings relief will only be given for periods where an owner is in shared occupancy with a tenant. This change could act to increase your Capital Gains Tax (CGT) bill by as much as £11,200 (or £22,400 as a couple).