News | June 5, 2019

Principal Private Residence Relief – Consultation on Changes

The Government has consulted on some changes proposed to lettings relief and the final period exemption for Capital Gains Tax (“CGT”) and Principal Private Residence Relief (“PPR”). If they go ahead, the changes will come into force on 6 April 2020. Wedlake Bell issued a response to the consultation, which is available here.


  1. Final period exemption – where a property has not qualified as a main residence for the whole of the individual’s ownership, the duration of ownership is apportioned into exempt and non-exempt periods. Currently, the last 18 months of ownership is regarded as exempt even if the property is not occupied at this time. However, this final period exemption is due to be reduced from 18 months to nine months. In light of the current political uncertainty, which is causing unease in the property market, a large number of people could be affected by this shortened period of exemption. It is worth noting, however, that there will be no change to the special rules for those moving into care or those with a disability, who will continue to be entitled to 36 months of final period exemption.
  2. Lettings relief – currently, lettings relief can benefit those who let out a whole dwelling that has at some stage been their main residence. It is not in fact a standalone relief, but rather an aspect of the PPR calculation. Lettings relief exempts a sum of up to £40,000 where a property has been used as a main residence but has also been let out. The relief is expected to be limited from 6 April 2020 to circumstances in which the owner co-occupies with the tenant, a much less common situation.


The Government has confirmed that it will publish its response to the consultation and draft legislation sometime in Summer 2019. If you think you may be affected by the proposed changes, please get in touch and we can assess whether you need to consider taking action.