RNS Chartered Accountants' partner Robert Smith said they may come as a surprise.
“Given the current coronavirus crisis, it's understandable that these changes, planned a long time ago and subject to consultation last year, have come into force under the radar,” said Robert.
For properties not occupied throughout the period of ownership, available deductions for capital gains tax purposes will be limited as follows:
- the final period exemption will be reduced from 18 months to 9 months (there are no changes to the 36 months that are available to disabled persons or those in a care home) and
- lettings relief will be reformed so that it only applies in those circumstances where the owner of the property is in shared-occupancy with a tenant. Letting relief will be restricted or curtailed for disposals on or after 6 April, 2020, regardless of when the period of letting took place.
Robert said many home owners were still unaware the final period exemption was reduced from 36 months to 18 months in 2014.
A further reduction to just nine months is likely to bring more property disposals within the scope of Capital Gains Tax.
Another aspect of the relief which is also changing from 6 April 2020 is lettings relief, limiting it to narrowly defined circumstances in which the owner shares occupation of their house with a tenant.
Robert said the practical effect of these changes will be few sellers will qualify for lettings relief if they sell their home after 6 April, 2020.
Any 'accrued' letting relief will be lost, as no apportionment can be made between gains attributable to pre and post 6 April 2020 disposals.
Again, this change brings more disposals within the scope of CGT.