When you sell your only or main home, you expect any gain you make to be free of CGT. But that CGT exemption only applies if you have occupied the property as your main home for the entire period of your ownership.
If you move out of your home before it is sold, the gain accruing for the final period when you were not living there would be subject to CGT. However, the tax rules allow up to 18 months of the final ownership period to be CGT exempt even if you were not living in the property.
HMRC is proposing to cut this final exempt period to nine months for properties sold from 6 April 2020. If the owner, or their spouse, is disabled or has moved into a residential care home, the final exempt period is extended to 36 months.
If you let out a property which had been your main home at some point, you can claim letting relief to reduce the taxable capital gain by up to £40,000. Letting relief is capped at the amount of relief due for the time (usually a different period) in which you occupied the property as your main home.
HMRC wants to restrict letting relief to cover only periods in which the owner occupied the property while part of it was let. Homeowners who move and then let out their former home will be hit by this change in CGT relief, which is due to take effect for properties sold on or after 6 April 2020.