On 1 April 2019, HMRC launched a consultation entitled “Private Residence Relief: Changes to the Ancillary Reliefs”. 

The government wants to focus more on relief for owner-occupiers, and intends to restrict the final period exemption and lettings relief from 6 April 2020:

  • final period exemption – it is proposed that the relevant period be reduced from 18 months to nine months, for disposals after 6 April 2020. This is to address the government’s concern that with a longer exemption period a greater relief can be accrued on two dwellings simultaneously (the unsold property and the new property).
  • letting relief – relief will remain at £40,000 per individual, but will be restricted to those who share their property with a tenant. This is to prevent those who rent out their entire property, which was previously their main residence, from obtaining the relief. The revised relief will apply to disposals on or after 6 April 2020.

It is also intended that two new extra-statutory concessions will be introduced: ESC D21 (late claims in dual residence) and ESC D49 (short delay by owner-occupier in taking up residence).

The consultation can be viewed here.