Blog Search


HMRC questions claims for Lettings Relief

If you have claimed lettings relief to reduce the capital gains tax (CGT) payable on the disposal of a let property after 5 April 2020, you should expect to receive a letter from HMRC asking you to amend your tax return to remove that claim.

The conditions for lettings relief to apply were altered on 6 April 2020, with a retrospective effect. For disposals on or after that date, lettings relief can only apply where both the following conditions are met for residential property:

– The property qualifies as the owner’s only or main residence for CGT purposes for at least part of the ownership period; and

– For a period of letting to qualify the landlord and tenant must occupy the property at the same time.

There is an exception to condition 2) where the owner is living in job-related accommodation, as can apply to Church Ministers, in which case those deemed periods of occupation by the owner, can qualify for lettings relief.

You can’t double count a period of main residence relief and lettings relief. If the taxpayer is in concurrent occupation with the tenants, and they are living as one household, the whole property will qualify as the landlord’s main residence for that period, and lettings relief doesn’t come into play.

It follows that the only situation where lettings relief could apply from 6 April 2020 onwards is where part of the property is occupied separately by a tenant, for example by letting out a ‘granny flat’ or annex. However, if that let area has always been self-contained, it may be regarded as a separate dwelling and thus not part of the main home where the gain is covered by main residence relief.

Capital gains realized on buy-to-let or move-and-let properties that taxpayers expected to be covered by lettings relief plus main residence relief are partly exposed to CGT.

  • Latest news and testimonials

  • Latest News

    • September Q&A

      Q. I have two small businesses which are treated as a group for VAT purposes, so we only submit a single VAT return covering both …

      Read more
    • Making Tax Digital for Business: update

      In July, the Government confirmed that the Summer Finance Bill would be published in September, with the measures dropped from the pre-election Finance Bill being reintroduced …

      Read more
  • Testimonials

    • Partner – Solicitor

      I have worked with SBL over the last 10 years on numerous matters involving owner-managed business. They are professional, personable, knowledgeable and work incredibly hard to provide the best advice to their clients. I would have no hesitation in recommending SBL.

  • Don’t hesitate to ask

    SBL are here to help. With accountancy advice and tax planning experts on hand to guide you and your business on the pathway to success! You can call us on 020 7580 6822, or email us on or if you’d prefer you can complete our Free Online Enquiry Form and one of the team will be in touch shortly.

    Don’t hesitate to ask

    Don’t hesitate to ask section

    • This field is for validation purposes and should be left unchanged.

    By submitting my details on this form, I consent to being contacted by a member of the SBL Accountants team by email or telephone. Privacy Policy