In July 2019, the government announced plans to make a number of changes to capital gains tax (CGT) principal private residence relief (PPR). PPR is the relief that exempts homeowners from paying CGT on their main residence.

The proposed changes were originally announced in the 2018 Budget and, following a consultation exercise, are now due to take effect from 6 April 2020. The main changes are:

- a reduction in the final period exemption from 18 months to 9 months;

- lettings relief to be restricted to owners who share occupation with their tenant;

- changes to the reporting and payment of CGT liabilities arising on the disposal of residential property: from 6/4/20, a provisional calculation of the gain will need to be submitted via an online return and the arising tax paid over to HMRC within 30 days (previously the gain was reported via a self assessment tax return due to be submitted and tax paid by 31 January following the end of the tax year in which the disposal arises).

The new rules will apply to sales of UK residential property by individuals, partnerships and trustees.  As a tax professional, many of my clients are affected by these new rules and as a result have been seeking advice in respect of their rental properties. Many wishing to dispose of the properties prior to 6 April 2020 to bank the valuable PPR and lettings relief on which they relied.

In view of the current worldwide, social and economic COVID19 crisis, the government has postponed reforms to the IR35 tax rules until 2021 to alleviate pressure on businesses and individuals during this very difficult, unprecedented time. The same should apply to the changes to capital gains tax (CGT) principal private residence relief (PPR). Individuals should be given more time to make informed decisions in a climate that is not dictated by economic uncertainty. Without a delay, many individuals’ hands will be forced to accept the new rules at 6 April without an opportunity to dispose of properties which will now not sell, unless at a loss/considerably undervalued and with significantly less professional resources available as working from home measures are rolled out across the country. Furthermore, if CGT liabilities are due within 30 days of completion, this will cause undue strain on already stretched reserves.