There are three new tax reforms which were announced in the 2018 Budget and which are due to be
introduced on 6th April later this year. The changes could have big implications for landlords and the amount of Capital Gains Tax (CGT) payable if they decide to sell a rented property which they’ve lived in at some point during their ownership.

First of all Lettings relief will be limited to properties where the landlord lives with their tenants from 6th April. Landlords are currently entitled to relief of £40,000 on CGT, even if they don’t live at the property.

Secondly, private residence relief is being scaled back which means that landlords who previously lived in their houses before letting them out will see the period they are entitled to CGT relief cut from 18 months to nine.

Finally, the CGT incurred following the sale of any residential property will now have to be paid within 30 days of the completion date. At present, owners can wait to tell HMRC in their tax return for that tax year, but after 6th April they will need to complete an online return and pay any capital gains due. Failure to pay within the 30 day deadline could result in HMRC imposing interest and penalties.

What does all this mean to landlords looking to sell a residential property? If they’re considering selling a property after 6th April they may have to pay more CGT.