Tax group calls for letting relief transition
20th January 2020
Proposed changes to letting relief should be transitionally phased in to prevent landlords from paying significantly higher capital gains tax bills, a tax group has said.
Until the end of 2019/20, landlords can claim letting relief of up to £40,000 if they have lived in a property at some point during their ownership.
Subject to the measure being in a new Finance Bill, the relief will only apply to those who shared occupation of their property with a tenant.
The Association of Taxation Technicians (ATT) has warned that many landlords are on a cliff edge as a result.
From 6 April 2020, landlords who let out their property after they moved out will lose any relief they would have been entitled to for those let periods.
The shared-occupation rule contained in Finance Bill 2019 will also apply to any let periods before 2020/21.
Michael Steed, co-chair of the ATT's technical steering group, said:
"Someone who was entitled to the maximum letting relief under the old rules, but sells on 6 April 2020, could be up to £11,200 worse off than if they had sold a day earlier.
"If the shared-occupation change to lettings relief goes ahead, any entitlement built up under the old rules should be frozen and preserved at 5 April 2020, with the new conditions only applying to let periods after that.
"This should help to avoid the cliff-edge effect and avoid the retroactive effect of the policy."
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