30 SECOND TAX SPEED READ - CAPITAL GAINS TAX: PRINCIPAL PRIVATE RESIDENCE RELIEF
The sale of a main residence in the UK benefits from the Principal Private Residence Relief (“PPR”) from CGT. For sellers who are no longer occupying the property when it’s sold their period of ownership is assessed to determine the period of time they occupied the premises versus the period they did not. In calculating this fraction, sellers could always rely on the last 18 months of ownership being automatically franked as qualifying for PPR regardless of how the property was used. This franked period enhanced the fraction/percentage of the property’s capital gain that benefitted from PPR.
What’s changing? It is proposed that the 18-month automatic PPR period be cut to 9 months. The effect of this is that more ‘gain’ may become chargeable to CGT.
There will be a consultation first, but it’s proposed that the changes will take effect in April 2020.
Property Lawyers should follow the consultation closely and keep clients periodically updated so that those clients who would be disadvantaged should the change be implemented, can effect a CGT disposal before the April 2020 date.