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CGT relief for homeowners to be cut back in April 2020 despite criticism

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.”

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