Private Residence Relief (PRR) is the principal Capital Gains Tax exemption for UK residential property. Where a property was at some point the owner's only or main home, the gain that arose during the qualifying occupation period is exempt from CGT. For landlords who previously lived in a property before renting it out, PRR can substantially reduce the chargeable gain on sale — but the rules have tightened significantly since 2020, and planning assumptions based on the old 18-month final period or Lettings Relief may be out of date.
How PRR is calculated: time apportionment
PRR exempts the proportion of the total gain that arose during qualifying periods of occupation. The calculation uses whole months of ownership and occupation.
| Period type | Duration | Exempt under PRR? |
|---|---|---|
| Actual occupation as main home | Variable | Yes — full relief |
| Final period of ownership | 9 months | Yes — unconditional (post-April 2020) |
| Qualifying absence (any reason, pre/post-occupied) | Up to 3 years total | Yes — deemed occupation |
| Employment anywhere in UK (required by employer) | Unlimited | Yes — deemed occupation |
| Working abroad under employment contract | Up to 4 years | Yes — deemed occupation |
| Let as rental, no qualifying absence applies | Variable | No — chargeable |
The 9-month final period exemption
The last 9 months of ownership qualify for PRR regardless of whether the property is occupied at the time, provided it was the owner's main residence at some earlier point. The reduction from 18 months (pre-April 2020) significantly increased CGT exposure for landlords in slow sales markets or long chains.
Lettings Relief: effectively abolished from April 2020
Prior to 6 April 2020, Lettings Relief gave additional CGT relief of up to £40,000 per owner (£80,000 jointly) on the letting portion of a gain, where the owner had previously lived in the property. From 6 April 2020, Lettings Relief is available only where the owner shares occupation of the property with the tenant throughout the letting period. For standard buy-to-let arrangements where the landlord does not also live in the property, Lettings Relief no longer exists.
Qualifying absences that extend PRR
- Any reason (general absence): up to 3 years total absence, provided the property was the main home both before and after the absence
- UK employment requiring absence: any length, no cap, provided the property was the main home before and after
- Working abroad under employment: up to 4 years, provided the property was the main home before and after
- Critical condition: most qualifying absences require actual occupation of the property both immediately before and after — without this, the deemed-occupation treatment fails
CGT rates and the 60-day reporting obligation
- Chargeable residential property gains taxed at 18% (basic rate) or 24% (higher/additional rate) from 30 October 2024
- Annual Exempt Amount reduced to £3,000 from April 2024
- Gains on UK residential property must be reported and tax paid within 60 days of completion via HMRC's UK Property online service
- The gain is also reported in the annual Self-Assessment return if the owner files one
This guide is for information only and does not constitute tax advice. Consult a chartered accountant or tax adviser for advice specific to your circumstances.