Only or main residence relief and divorce after the OTS’s second CGT report

Capital gains tax is not a big revenue-raiser. In the 2019-20 tax year it raised £9.8bn an embarrassingly small amount compared with the £339bn raised by income tax and National Insurance. It is however a complicated tax.

The first report of the Office of Tax Simplification (OTS) on capital gains tax concentrated on the wider structural issues. This second report aims to tackle ‘practical technical and administrative issues’ (tinyurl.com/otscgtsecond). The 14 recommendations will not affect the mainstream of taxpayers but will have a big and generally beneficial impact on the small number of people caught in anomalies at the margin.

This article focuses on the issues identified and solutions suggested in relation to main homes and divorce.

Only or main residence relief

Only or main residence relief enables most homeowners to sell their home...