With effect from 6 April 2020, the Principal Private Residence (PPR) extension has been reduced from 18 months to just 9 months (oh for the halcyon days when it was a full 36 months).
A second measure being introduced is the restriction in the application of lettings relief for rental properties. The relief will now only be available if the landlord had lived in the property as his or her main residence during the period of letting.
Given that full PPR relief is likely to be available in these circumstances, one might conclude that lettings relief on rental properties has effectively been neutered.
These two measures are likely to have an impact on planning, not just for landlords but also for couples ending a relationship, whether matrimonial or other.
Planning might include, for example, banking lettings relief, it if is available under the current rules, before 6 April 2020.
The 9 months exemption may not prove to be very long for one party leaving the former matrimonial home and acquiring another property to live in.
There are many variable factors with the main residence and an early review of the position is now even more important, should a couple commence proceedings.
For many years now, we have been advising family solicitors on the capital tax issues relating to the former matrimonial home and other property owned by the parties.
Please call Lucy Orrow or myself if you have a case where these measures may have an impact.
Disclaimer: The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.