Letting Relief will be significantly curbed under the new Autumn budget.
Currently landlords who sell a lettings property that they have previously used as their only or main residence are entitled to Private Residence Relief for the years that they lived in the property. The last 18 months are also treated as a period of residence.
Landlords in this situation may also claim an addditional Letting Relief on which they do not pay Capital Gains Tax (CGT). The amount is the lower of: the Private Residence Relief they are claiming for; £40,000; or the amount of any chargeable gain attributable to the letting.
Private Residence Relief is the policy under which people do not have to pay CGT on any profits from the sale of their only or main residence.
Under the Autumn budget 2018, the Chancellor announced that from April 2020, Letting Relief will be limited to situations where the owner of the property is in shared occupancy with the tenant. The final period exemption will be reduced from 18 months to 9 months. However, there will be no change to the 36 month final exemption period which applies to people with disabilities or those in a Care Home.
Read more in The Guardian’s article on Letting Relief Reform.