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Selling your home and principal private residence relief

David McManus

David McManus | Tax Advisory and Compliance Service

Wednesday 28th Nov, 2018

The changes to the rules surrounding capital gains tax (CGT) reliefs have continued in this budget in relation to principal private residence (PPR) relief which is available when selling a property which has at any time been your main residence.

A gain made on selling a residential property is subject to CGT at 28% for higher rate and 18% for basic rate taxpayers. Principal Private Residence (PPR) relief stops taxpayers from being liable to CGT during the period a property has been occupied as their main home. PPR relief covers not only periods of actual occupation but also other periods.

The change does not affect the relief available for those who have had to move out of their homes and into residential care, and in this situation the relief remains 36 months.

This includes up to 12 months if refurbishing the property before moving in, time spent working away from home (subject to certain conditions), as well as the final 18 months of ownership, regardless of occupation (protecting those who have a cross-over period when replacing their main home).

For sales after 5 April 2020 the final 18 month ‘exempt period’ is being halved to nine months.

The change does not affect the relief available for those who have had to move out of their homes and into residential care, and in this situation the relief remains 36 months.

Where the property has been let at any time, each owner can claim lettings relief to reduce the taxable capital gain. This relief can cover gains of up to £40,000 per owner, but it is only available if the property has been the owner’s main home for a period. Lettings relief is the lower of the PPR available or the gain arising during the let period.

From April 2020, HMRC are removing the availability of lettings relief for those not occupying the property at the same time as their tenants, meaning only owner-occupiers would be eligible for this relief.

Budget 2018: National Insurance Contributions changes

The changes in the Budget to National Insurance Contributions (NICs) will have an effect on both the self-employed and higher rate earners, lessening the impact of the announced personal allowance and higher rate tax threshold increases.

Read more here