The Finance Bill 2020 has confirmed the Government’s proposals to reduce the tax exemption applying to the main home, a change that will reportedly net the Government £470m.

Under the current rules, a homeowner can move out of their property and they have 18 months to sell the property before CGT becomes relevant. From 6 April 2020, that 18-month period is being halved to 9 months.  Five years ago, the final period exemption was 36 months, and the latest rule change restricts the relief much further, according to tax advisory firm Blick Rothenberg.

Nimesh Shah a partner at the firm said: “Strangely, you still have 36 months to sell your former home for the purposes of reclaiming the additional 3% SDLT. It seems bizarre that there is one policy for CGT and something different for SDLT – why not align both to make the overall tax regime simpler?”

He added: “Another major change to the rules is to ‘lettings relief’, which can be worth up to £11,200 in CGT. The current rules provide for additional relief where someone rents out their home. From 6 April 2020, the rules are being restricted so that it only applies where the homeowner occupies the property with a tenant – currently, there is no need for the owner to live in the property so they could move out, rent their home and benefit from the relief.”