InsightsNews - Tax Planning - POSTED: January 13 2020
Homes under the Hammer…again
Over the past few years we have seen second property owners hit with increasing amounts of legislation making it harder to own more than one property.
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It all started with the Summer Budget of 2015 and since then we have seen the following:
1 April 2016 – introduction of the 3% Stamp Duty Land Tax surcharge
6 April 2016 – the loss of the wear and tear allowance
6 April 2017 – restriction of income tax relief
6 April 2017 – Capital Gains Tax (CGT) rates reduced by 8% but not for gains on residential properties
And if you thought it couldn’t get any worse there are a few more changes on the horizon for those with a second property.
If you are going to be selling a property after 6 April 2020, with a few exceptions including your principal private residence (PPR), the CGT will need to be paid and a return submitted to HMRC within 30 days of completion. Due to the timing of this, people are not going to be able to complete accurate returns as they will not have all details of their gains and income for the tax year. This could lead to cash-flow problems if people are relying on later losses to set against any gains for the property.
Also, on 6 April 2020 the principal private residence relief (PPR) rules will be changing. Currently the final 18 months of ownership of a property are exempt regardless of whether you continue to live in the property, but this will be reducing down to the last nine months. Also, lettings relief, which currently provides a maximum of £40,000 reduction in CGT for a property, will be restricted to owners who share occupancy with a tenant.
For more advice on CGT, please contact a member of the Tax Planning Solicitors.
This content is correct at time of publication
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