The period that private residence relief impacts on capital gains tax will be reduced from 6 April 2014.

Private residence relief – or principal private residence relief – applies for capital gains tax purposes if the dwelling house or part of the dwelling house has been the individual’s only or main residence during some period of ownership.

If during the period of ownership the dwelling house or part of the dwelling house has been used exclusively for some other purpose then the relief is reduced, although the last 36 months of ownership will be treated as if it was the individual’s only or main residence even if in fact it was not so used.

However, this final period exemption will be reduced from 36 months to 18 months from 6 April 2014. This was announced in the Autumn Statement on 5 December 2013, although the legislation has not yet been put in place.