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Another tax hike on its way for the lettings industry?
An accountancy trade body is warning of another possible tax hike to hit the lettings industry.
The Association of Accounting Technicians is warning that landlords who have previously lived in the property they let could – if changes to letting relief proposed last year are included in this year’s Finance Bill – see an increase in their capital gains tax bill on a sale of up to £11,200.
Until April 5 this year, letting relief is available to individuals who have lived in a property at some point during their ownership, but then move out and let the property.
The relief can cover up to a maximum of £40,000 of gains arising during let periods.
If the proposed changes released by the government in draft form last year are implemented, from April 6 the letting relief will only be available where the homeowner and the tenant are occupying the property at the same time – socalled shared occupation.
Under the draft legislation, the requirement for shared occupation will apply not only to future lettings but also any let periods prior to April 6 this year.
This means that many people who let properties after they moved out will lose any relief they would have been entitled to for those let periods, and will have little or no time to take action to preserve it.
“Someone who was entitled to the maximum letting relief under the old rules, but sells on April 6 2020, could be up to £11,200 worse off than if they had sold a day earlier on 5 April 2020” insists Michael Steed, co-chair of the ATT’s Technical Steering Group.
“We recommend that if the shared occupation change to lettings relief goes ahead, any entitlement built up under the old rules should be frozen and preserved at April 5 2020, with the new conditions only applying to let periods after that date. This should help to avoid the cliff edge effect and avoid the retroactive effect of the policy.”
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Original Source: Letting Agent Today.
Original Author: Graham Norwood.
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https://www.lettingagenttoday.co.uk/breaking-news/2020/1/another-tax-hike-on-its-way-for-the-lettings-industry
