Opinion Former Article

Call to protect people who can no longer live independently

The Low Incomes Tax Reform Group (LITRG) is concerned that the upcoming tightening of the rules on private residence relief will affect those who move out of their home because they are unable to live independently. The group is calling for such individuals to be protected from the changes by broadening the scope of an exception which currently only applies where the person is disabled or resident in a care home.

Private residence relief protects individuals from being subject to capital gains tax on the sale of their main home. Currently, assuming the property qualifies, full relief is available even if the individual has not lived in the property for the final 18 months of ownership. This allows a period of time for the individual to sell the property after moving out of it but without attracting a capital gains tax charge. For individuals who are disabled1 or resident in a care home, the 18-month period is extended to 36 months.

From April 2020, the 18-month period is being reduced to nine months, but the exception for those who are disabled or resident in a care home remains at 36 months. LITRG has made representations to the Government that nine months is not long enough for those with additional care needs to arrange the sale of their home where they do not currently qualify for the 36-month exception. This will include those individuals who move out of their home because they are no longer able to live independently and who do not qualify as disabled under the rules. Instead, they may move in with family or some other form of sheltered accommodation.

Victoria Todd, Head of the LITRG Team, said:

“We recognise that reduction in the final period exemption is to tackle perceived avoidance, but the change is disproportionate to the risk it is trying to remedy and lacks the evidence to justify the change. We are concerned about the financial and administrative burdens that will result for low-income taxpayers.

“We are pleased that the 36 month exemption period for those who are disabled or resident in a care home will continue, but are concerned that the reduction to nine months in all other cases will bring into focus those who cannot qualify for this exemption but who must sell their home because they can no longer live independently. That is why we urged the Government to broaden the scope of the 36 month exemption.”

The Government rejected this proposal as part of its consultation on the rules, stating that it would be ‘difficult to distinguish this group from those moving for other reasons’. But LITRG has proposed a number of ways in which this could be achieved.

Victoria Todd continued:

“Having to move out of your home for reasons of poor health, fitness or personal safety – often as a result of older age – can be a distressing and stressful time not only for the individual moving out but also for the care giver, who is likely to be a family member. The burden of arranging the sale of the property, which may require a lot of work before it is in a proper state to be marketed for sale, is also likely to fall upon the care giver. Nine months in such circumstances is not long enough.

“We do not accept the Government’s response that it would be difficult to distinguish this group from those moving for other reasons. An individual would be able to obtain and provide evidence to support not being able to live independently, for example a local authority needs assessment, a hospital discharge letter supporting high support needs, or other evidence provided by a suitably qualified medical professional.

“If the Government chooses to take such a broad-brush approach in order to tackle perceived avoidance, then it must be accompanied by proper measures to protect vulnerable groups who are affected unintentionally.”

Notes for editors

1. Under Finance Act 2005, Schedule 1A, a “disabled person” for this purpose means:

(a) a person who by reason of mental disorder within the meaning of the Mental Health Act 1983 is incapable of administering his or her property or managing his or her affairs,

(b) a person in receipt of attendance allowance,

(c) a person in receipt of a disability living allowance by virtue of entitlement to the care component at the highest or middle rate,

(d) a person in receipt of personal independence payment by virtue of entitlement to the daily living component,

(e) a person in receipt of an increased disablement pension,

(f) a person in receipt of constant attendance allowance, or

(g) a person in receipt of armed forces independence payment.


2. LITRG’s submission can be read here.


3. The Government considers that the tax rule change will better target reliefs at owner-occupiers, counteracting a perceived exploitation of the rules where individuals with more than one home can receive a final exemption period on both properties.


4. Low Incomes Tax Reform Group


The LITRG is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.


The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. The CIOT’s 18,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

Contact: Hamant Verma, External Relations Officer, 0207 340 2702 HVerma@ciot.org.uk

Out of hours contact: George Crozier, 07740 477 374)

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