Private Residence Relief (PRR) can exempt some or all of the gain made when you sell a home from UK Capital Gains Tax (CGT). Full relief is generally available where the property has been your only or main residence throughout your ownership and the other PRR conditions are satisfied.
The rules become more complex where you have owned more than one property, lived elsewhere for periods, let out part or all of the property, used part of the home exclusively for business, or sold land separately from the property. The amount of PRR therefore needs to be considered against your actual ownership and occupation history.
What Is Private Residence Relief?
Private Residence Relief is a Capital Gains Tax relief for individuals who dispose of a dwelling house that has been their only or main residence. It can exempt the part of a capital gain attributable to qualifying periods of occupation, including certain periods treated as occupation under the statutory absence rules.
PRR is not automatically available simply because you call a property your home. HMRC looks at factors including how the property was occupied, the periods of ownership, whether another residence existed, how the property was used, and whether the land falls within the permitted area.
Private Residence Relief at a Glance
| Factor | General PRR treatment |
|---|---|
| Main residence | Qualifying periods can receive PRR |
| Full-period occupation | May result in full relief if other conditions are met |
| Final period | Usually the final 9 months qualify |
| Qualifying absence | Certain statutory absences can qualify |
| Garden and grounds | Usually subject to the 0.5 hectare permitted area |
| Exclusive business use | The relevant part may fall outside PRR |
| Letting | May restrict PRR; Lettings Relief is limited |
| Multiple residences | One main residence can generally qualify at a time |
When Does a Property Qualify for Full Private Residence Relief?
Full PRR can apply when the property has been your only or main residence throughout your period of ownership and the statutory conditions are met. HMRC identifies four core conditions for full relief.
The Property Was Your Main Residence
The dwelling house must have been your only or main residence throughout the period of ownership, subject to qualifying periods of deemed occupation.
There is no simple minimum number of days that automatically makes a property your main residence. The facts and circumstances of your occupation are relevant.
You Did Not Have Disqualifying Absences
Certain periods away from the property can still qualify for PRR under the statutory rules. These include specific employment-related absences and certain other temporary periods.
The conditions for absence relief can be technical, particularly where you own another residence during the same period.
The Land Is Within the Permitted Area
PRR can extend to the garden and grounds enjoyed with the dwelling house. The statutory permitted area is normally 0.5 hectares, including the area occupied by the dwelling house. A larger area may qualify where it is required for the reasonable enjoyment of the property, considering its size and character.
No Exclusive Business Use
If part of your home has been used exclusively for business purposes, PRR can be restricted for that part. By contrast, using a room for working from home does not normally prevent full relief where the room also has private residential use.
Deemed Occupation and Allowed Absences
You do not necessarily lose PRR every time you move out of your home. Certain periods of absence can be treated as periods of occupation where the statutory conditions are satisfied.
Working Abroad
A period during which you are employed abroad and all the duties of that employment are performed outside the UK can qualify as deemed occupation, subject to the relevant conditions.
Working Elsewhere
An absence of up to four years can qualify where the reason for the absence is working elsewhere, whether in the UK or overseas. Separate qualifying periods can also be relevant, subject to the statutory limits.
General Absence of Up to Three Years
Certain periods of absence of up to three years, including separate qualifying periods within the statutory rules, can be treated as occupation. The conditions need to be reviewed rather than assuming every three-year absence automatically qualifies.
Returning to the Property
For many qualifying absence provisions, the property generally needs to have been your residence before and after the absence. This makes the timing of moving into, leaving, and returning to the property important when calculating PRR.
Moving Into a Newly Acquired Property
Special rules can apply where you purchase a property and take time to move into it because of construction, renovation, redecoration, alteration, or the disposal of your previous main residence. Under specified conditions, occupation can be deemed to begin from acquisition where you move into the property within the relevant two-year period.
When Is Private Residence Relief Only Partial?
PRR does not always exempt the entire gain. Where a property has only been your main residence for part of the ownership period, the gain generally needs to be apportioned between qualifying and non-qualifying periods.
Owning More Than One Residence
If you own two or more residences, PRR planning becomes more important. Generally, only one property can be your main residence for PRR purposes at a particular time.
Where you have more than one residence, you may be able to nominate which property is treated as your main residence. The nomination generally needs to be made within two years of a change in the combination of residences.
The property must actually be used as a residence to qualify for nomination. A property that is simply let to tenants cannot normally be nominated as your main residence.
Married Couples and Civil Partners
A married couple or civil partners living together can generally have only one main residence between them for PRR purposes. This means owning separate properties does not automatically give each partner a separate main residence for the relief.
Where both partners own residences and continue to use both as residences, the relevant nomination rules should be considered.
Business Use of Part of the Property
If you use a specific part of your home exclusively for business, the gain may need to be divided between the private and business portions.
For example, if one room is used exclusively as a business office and the remaining property is used as your home, the business portion may not receive the same PRR treatment as the residential portion. If the room has both business and private use, full relief may remain available for that area.
Property Bought to Realise a Gain
PRR is designed for genuine residential occupation rather than property acquired as part of a trading or development activity. The circumstances surrounding acquisition, occupation, development, and disposal can therefore matter when determining the correct tax treatment.
A property transaction intended to generate trading profits may need to be considered under rules other than ordinary CGT treatment. Professional advice is particularly important where property is purchased, developed, subdivided, or sold shortly after acquisition.
How Is Private Residence Relief Calculated?
Where full PRR is not available, the relief is generally calculated by reference to the qualifying period compared with the total period of ownership.
A simplified calculation is:
PRR = Total gain × qualifying period ÷ total period of ownership
The qualifying period can include actual occupation, qualifying deemed occupation, and the final qualifying period.
HMRC provides an example where a property was owned for 120 months, occupied as the main residence for 48 months, and received a further 9 months of final-period relief. The exempt proportion is therefore based on 57 qualifying months out of 120.
The actual calculation can become more complicated where there are multiple residences, qualifying absences, lettings, business use, or changes in ownership.
Final Period Exemption and Lettings Relief
The final period exemption and Lettings Relief are two areas that are frequently misunderstood. Both have specific statutory conditions.
Final 9 Months Exemption
If a property has been your only or main residence at some point during your ownership, the final 9 months of ownership generally qualify for PRR even if you were not living there during that period.
The final period exemption was reduced from 18 months to 9 months for disposals from 6 April 2020. A special 36-month period can apply in certain cases involving disability or residence in a care home, subject to the relevant conditions.
Letting Out Your Former Home
Letting a former main residence does not automatically mean the entire gain becomes taxable. PRR can still apply to qualifying periods, while the letting period may result in a chargeable proportion.
The current Lettings Relief rules are much narrower than the historic rules.
When Is Lettings Relief Available?
Lettings Relief can apply where you let part of your home while continuing to occupy another part as your only or main residence. It does not generally apply where the entire property was let out and you lived elsewhere.
The amount of Lettings Relief is the lowest of:
- £40,000
- The amount of PRR already available
- The amount of the gain attributable to the letting
These limits must be considered when calculating the final chargeable gain.
Private Residence Relief for Land and Gardens
PRR can extend beyond the building itself to land and gardens enjoyed with the residence.
The 0.5 Hectare Permitted Area
The normal permitted area is 0.5 hectares, including the dwelling house. A larger area may qualify where it is reasonably required for the enjoyment of the property, having regard to its size and character.
Selling Garden Land Separately
The order and circumstances of a land sale can affect PRR. Where garden or grounds are sold separately, the relief may not apply in the same way as it would if the land were disposed of with the residence.
This is particularly important where a homeowner is considering selling part of a garden for development.
Development Land
Land that has been separated, developed, or used for another purpose may require a separate PRR analysis. The nature of the land, its relationship with the residence, and the timing of the disposal can affect whether the gain qualifies.
Private Residence Relief for Non-UK Residents
Non-UK residents can still have UK Capital Gains Tax obligations when disposing of UK property. The PRR rules for non-residents contain additional conditions and should not be assessed solely on whether the property was once a home.
For relevant periods from 6 April 2015, the statutory rules include residence and day-count conditions for non-residents, subject to specific exceptions and circumstances. HMRC guidance should therefore be considered alongside the individual’s residence history.
If you live overseas but own a UK property, professional advice should be obtained before disposal because both UK tax residence and property occupation history can affect the calculation.
Private Residence Relief and Property Tax Planning
PRR planning should take place before a property is sold, particularly where the property has not been your main residence throughout ownership.
Important factors include:
- The date you acquired the property
- The date you moved into the property
- Periods when you moved out
- Employment-related absences
- Other residences you owned
- Main residence nominations
- Marriage or civil partnership
- Periods of letting
- Exclusive business use
- Garden and development land
- The expected disposal date
- Your UK tax residence status
The earlier these factors are reviewed, the easier it can be to identify potential PRR restrictions before a transaction becomes difficult to change.
Reporting Capital Gains Tax on a UK Residential Property Sale
If you sell or dispose of UK residential property and Capital Gains Tax is due, you may have to report the gain and pay the tax within 60 days of completion. This rule also applies to relevant non-resident disposals of UK property.
The 60-day deadline makes it important to calculate the gain and available PRR promptly. Waiting until the annual Self Assessment deadline may be too late for the property CGT reporting requirement.
Calculate the Gain
Start with the disposal proceeds and deduct the acquisition cost and allowable costs to establish the gain.
Calculate Private Residence Relief
Identify actual occupation, qualifying absences, the final 9-month exemption, and any other applicable reliefs.
Identify the Chargeable Gain
Any gain not covered by PRR or another applicable relief may remain subject to Capital Gains Tax, after considering allowable losses and the applicable annual exempt amount.
Report Within 60 Days
Where the UK residential property disposal creates a CGT liability, the relevant report and payment must generally be completed within 60 days of completion.
How We Can Help With Private Residence Relief?
Private Residence Relief can substantially reduce or eliminate a Capital Gains Tax liability, but eligibility depends on the property’s ownership, occupation, use, and disposal history.
We can review your circumstances and help determine:
- Whether your property qualifies for full or partial PRR
- How periods of absence affect the relief
- Whether a main residence nomination is relevant
- How letting affects the gain
- Whether Lettings Relief may apply
- How business use affects the calculation
- Whether garden or development land qualifies
- How the final 9-month exemption applies
- What Capital Gains Tax reporting obligations arise
- Whether action should be taken before the property is sold
Speak to a UK tax specialist before completing the sale if you are unsure how PRR applies to your property. A detailed review before disposal can identify issues that may materially affect the taxable gain.
Frequently Asked Questions
What is Private Residence Relief?
Private Residence Relief is a UK Capital Gains Tax relief that can exempt some or all of the gain arising when an individual sells a property that has been their only or main residence. The amount of relief depends on the property’s occupation and other statutory conditions.
Do I automatically get Private Residence Relief when I sell my home?
Not necessarily. Full relief normally requires the property to have been your only or main residence throughout ownership and the other qualifying conditions to be satisfied. Periods of absence, multiple residences, letting, business use, and land ownership can affect the amount of relief.
How long do I have to live in a property to qualify for Private Residence Relief?
There is no simple statutory minimum period that automatically determines eligibility. HMRC and case law consider whether the property was genuinely occupied as your only or main residence.
What is the final 9 months exemption?
The final 9 months of ownership can qualify for PRR where the property has been your only or main residence at some point. This applies even if you were not living there during those final months, subject to the relevant rules.
Can I claim Private Residence Relief if I rented out my home?
Potentially. You may receive PRR for periods when the property was your main residence and the final qualifying period. Lettings can restrict relief, while Lettings Relief may be available in limited circumstances where you lived in the property at the same time as the tenant.
Can I claim Private Residence Relief on a second home?
A second property can qualify for PRR for periods when it was your main residence. If you have more than one residence, the main residence rules and any applicable nomination need to be considered.
Can married couples have two main residences for PRR?
Generally, no. Married couples and civil partners living together can have only one main residence between them for PRR purposes.
Does working from home affect Private Residence Relief?
Using a room for work does not normally prevent full PRR if the room also has private residential use. However, exclusive business use of part of the property can restrict relief for that part.
Does Private Residence Relief cover my garden?
PRR can cover garden and grounds enjoyed with the residence, normally within the 0.5 hectare permitted area. A larger area may qualify if it is reasonably required for the enjoyment of the property based on its size and character.
Can I get Private Residence Relief if I live abroad?
Possibly. Non-UK residents can be subject to additional rules when claiming PRR on UK residential property. Tax residence, occupation, day-count requirements, and the period relating to the gain should all be considered.
When do I need to report Capital Gains Tax after selling a UK property?
Where CGT is due on a qualifying UK residential property disposal, you generally need to report the gain and pay the tax within 60 days of completion.
Can Private Residence Relief eliminate all Capital Gains Tax?
Yes, full PRR can eliminate the chargeable gain where all relevant conditions are satisfied. If only part of the gain qualifies, the remaining chargeable gain may be subject to CGT after applicable deductions, losses, and exemptions are considered.
Should I get tax advice before selling my property?
Yes, particularly where you have lived elsewhere, own multiple properties, rent out the property, use part of it for business, live outside the UK, or plan to sell development land. Reviewing PRR before completion can help identify the correct relief and reporting position.