Private Residence Relief (PRR) keeps gains on the sale of most main residences outside the Capital Gains Tax regime. If you sell a house which was always your main residence and you lived in it throughout the time you owned it, PRR means you don't pay CGT on any gain on the sale.
There are, however, circumstances in which a gain might arise on a house that was not the taxpayer's main residence for the entire period of ownership. In such circumstances, there are extra, "ancillary" reliefs that may apply. Budget 2018 announced changes to aspects of these ancillary reliefs.
Lettings relief currently provides up to £40,000 of relief to a taxpayer who lets out a property that is, or has been, their main residence. The relief is therefore potentially very valuable to an individual disposing of a property at a gain - the CGT rate applicable to a higher rate taxpayer disposing of a residential property is 28%, so lettings relief is currently worth up to £11,200 to a taxpayer in terms of tax savings. It has now been announced that from April 2020 lettings relief will be available only to those who are in shared occupancy with a tenant.
The final period exemption currently means that taxpayers do not have to pay CGT on gains made in the final 18 months of ownership, even if they did not occupy the property as their main residence during that time. From April 2020, the Chancellor has said, the final period exemption will be reduced to nine months (those moving into care homes and people with a disability will still benefit from a 36 month final period exemption).
The restriction on lettings relief, in particular, is likely to impact many "accidental landlords" as well as those who purposely hold onto and let their former home when they "trade up" or move in with a partner, resulting in higher CGT bills on the eventual disposal of affected properties.