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Capital Gains Tax: Increases For Landlords Are On The Way!

You've got until 6th April 2020 ...

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In the 2018 Budget, Philip Hammond announced changes to Capital Gains Tax that will impact the sale of a landlord's home, now rented out to tenants ...

You've got until 6th April 2020 before the Capital Gains Tax changes kick in!

You've got until 6th April 2020 before the Capital Gains Tax changes kick in!

copyright: andreypopov / 123rf

HMRC has now published a consultation document that reaffirms what was said in the Budget and is uncomfortable news for property owners. From 6th April 2020, two key reliefs will be reduced.

The gain on a property such as this benefits from two very important tax reliefs:

  • Firstly, Principal Private Residence Relief. This shelters the proportion of the gain on the sale relating to the time that the property was the owner's home. It treats the last 18 months of ownership as if the landlord was living there regardless of whether they actually were.

  • Secondly, Letting Relief. This is applicable if PPR Relief is available for the property. Again, it shelters tax, this time, a proportion of the gain relating to the time it was rented out. This is capped at either the PPR Relief or £40,000, depending on which is lower.

Final period exemptions for PPR Relief will halve from 18 months to just 9 months and more dramatically, Letting Relief will be restricted to only apply where the landlord and tenant are in a form of joint occupation.

Now, that headline tax rates are at 28% for gains on residential properties, there could potentially be a huge increase in tax charges for property owners who want to sell a property they are renting out. If you're thinking of selling then do it before 6th April 2020, but do get the right tax advice as soon as you can.

"Would you like to know more?"

If you'd like to find out more about Capital Gains Tax, Principal Private Residence Relief, Letting Relief or any other aspect of taxes due on properties, do give me a call on 01908 774323 or click here to ping me an email and let's see how I can help you.

Until next time ...


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More about Helen Beaumont ...

Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.