If you have a taxable gain on a former main residence, there are 3 key changes to Main Residence tax relief planned to come into effect from 6th April 2020:

  1. The payment of any capital gains tax will be due within 30 days – I reported on this back in November 2018.
  2. The period qualifying for main residence relief at the end of ownership is reduced from 18 months to only 9 months.
  3. Lettings relief will only be available in cases where the homeowner is occupying the property at the same time it is let out.

Having to pay capital gains tax within 30 days will be a major change, as the estimated tax liability will have to be calculated and then adjusted later. It is likely that the estimations will be being made well before all the income details for the year are known.

Reducing the tax relief available from 18 months down to 9 means that people could incur additional costs when they are struggling to sell their home after moving out.

Up until now, lettings relief had been a valuable benefit for people letting out their homes. It could reduce the capital gain by up to £40,000 depending on how long the property was both let and owned. The proposal to restrict the relief to only cases where co-occupation is occurring will mean the loss of the relief completely for many.

These 3 changes mean that potential property sales should be reviewed well in advance of the 5th April 2020 year-end, as there could be delays with a number of people choosing to sell at the same time.