Consultation outcome

Capital Gains Tax: Private Residence Relief: changes to the ancillary reliefs

From:: HM Revenue & Customs and HM Treasury
Published: 1 April 2019
Last updated: 11 July 2019 — See all updates

Read the full outcome

Capital Gains Tax: Private Residence Relief: summary of responses to the consultation on changes to the ancillary reliefs

PDF, 299 KB, 13 pages

Detail of outcome

This document summarises the responses received to the consultation on the changes announced at Budget 2018 to some of the ancillary reliefs in private residence relief in CGT. These changes primarily relate to lettings relief and the final period exemption. The document also outlines the government’s next steps regarding these changes.

Following this consultation, the government has published draft legislation, an explanatory note and a tax information and impact note (TIIN).

Original consultation

Consultation description

Private Residence Relief (PRR) is designed to keep out of Capital Gains Tax (CGT) those gains or losses that arise when a person sells or otherwise disposes of a dwelling that has been used as their only or main residence.

This relief is supplemented by ancillary reliefs that aim to deal with other situations where imposing CGT would lead to undesired outcomes. The government remains committed to this policy.

The government is also committed to keeping the tax system under constant review to ensure that any reliefs and exemptions are properly targeted.

In line with both those ongoing commitments, at Budget 2018, the government announced that 2 of the ancillary reliefs would change to better target PRR at owner-occupiers:

the final period exemption will be reduced from 18 months to 9 months, although the special rules that give those with a disability, and those in care, an exemption of 36 months will not change
lettings relief will be reformed so that it only applies where an owner is in shared occupancy with a tenant

These changes will take effect from 6 April 2020.

This consultation sets out the government’s proposed changes in more detail, and invites views on how they will work in practice. It also invites views on some technical aspects of the PRR rules.

Documents