Landlord CGT Lettings Relief Guide 2026 — Post-April 2020 Rules, Shared Occupancy Test and Who Can Still Claim

CGT lettings relief — the pre and post April 2020 rules

How lettings relief worked before 6 April 2020 and the shared occupancy restriction that now applies:

• Pre-April 2020 lettings relief (TCGA 1992 s.223, now repealed for new claims): Before 6 April 2020, lettings relief was available to any individual disposing of a property that: (a) had at some point been occupied as their only or main residence (qualifying for private residence relief — PRR); and (b) had been let as residential accommodation during a period of the ownership. The relief was the lesser of: (i) the amount of PRR available; (ii) £40,000; and (iii) the gain attributable to the letting period. A higher-rate taxpayer with £40,000 of lettings relief available would have saved up to £11,200 in CGT (40% × £40,000). Both partners in a couple each had their own £40,000 allowance — so a jointly-owned property could shelter up to £80,000 of gain from CGT. Post-April 2020 restriction (TCGA 1992 s.223B inserted by Finance Act 2020): from 6 April 2020, lettings relief is only available where the landlord was in shared occupancy with the tenants — that is, the owner was living in the property at the same time as the tenants were in occupation. This is known as the 'shared occupancy condition'. For most conventional buy-to-let landlords who moved out of the property before the tenancy began (or at any point before the letting period they are claiming relief for), lettings relief is no longer available from April 2020. The shared occupancy requirement effectively kills the relief for the vast majority of investment landlords who let on ASTs after vacating the property
• Who can still claim lettings relief post-April 2020: The shared occupancy condition is met where the owner was living in the property as their only or main residence at the same time that the tenant (or lodger) was also living there. The most common scenario where lettings relief survives: (a) Live-in landlords with lodgers: a landlord who takes in lodgers under a lodger agreement (a licence, not a tenancy) while continuing to live in the property qualifies — they and the lodger are simultaneously resident; the rent-a-room scheme may also apply (tax-free allowance of £7,500/year); lettings relief available on the lodger arrangement even after April 2020; (b) Owner-occupiers who let rooms while away temporarily: more complex; HMRC may challenge whether the property continued to qualify as the main residence during any absence; (c) Shared houses where the landlord holds a room: where the landlord occupies one room and lets others under separate agreements — shared occupancy condition potentially met for the letting periods during owner-occupation. Who cannot claim: the typical buy-to-let landlord who purchased as an investment, let on an AST, and never lived in the property cannot claim PRR or lettings relief (no period of main residence). A landlord who lived in the property for a period, then vacated and let the entire property on an AST, cannot claim lettings relief for the period after vacating (from April 2020) — though they can claim PRR for the period of occupation plus the final 9-month period

Calculating lettings relief, final period exemption and interaction with PRR

The mechanics of lettings relief calculation and how it interacts with private residence relief and the final period exemption:

• PRR and lettings relief calculation (where shared occupancy condition met): Step 1 — calculate total gain: disposal proceeds minus original acquisition cost minus acquisition/disposal costs minus improvement costs. Step 2 — calculate PRR: (period of qualifying main residence + final 9 months) ÷ total ownership period × total gain. Step 3 — calculate gain attributable to letting period: total ownership period minus PRR-qualifying periods. Step 4 — calculate lettings relief (where shared occupancy met): lesser of (a) PRR amount; (b) £40,000; (c) gain attributable to letting period. Step 5 — taxable gain: total gain minus PRR minus lettings relief minus annual CGT exempt amount (£3,000 from 2024/25). CGT rates on residential property: 18% (basic rate taxpayer); 24% (higher/additional rate taxpayer — rate from 30 October 2024 Budget). Example (post-April 2020, shared occupancy met — live-in landlord): owned 10 years; main residence 6 years (with lodgers throughout); total gain £120,000; PRR = 6/10 (plus final 9 months but subsumed) × £120,000 = £72,000; gain attributable to letting = £48,000; lettings relief = lesser of (£72,000 PRR; £40,000 cap; £48,000 letting gain) = £40,000; taxable gain = £120,000 − £72,000 PRR − £40,000 LR − £3,000 CGT allowance = £5,000 taxable; CGT at 24% = £1,200. Without lettings relief: taxable gain = £45,000; CGT at 24% = £10,800
• Final period exemption, reporting and devolved positions: Final period exemption: the last 9 months of ownership always qualify for PRR regardless of whether the owner was in occupation during that period (reduced from 18 months on 6 April 2020; further reduction to 9 months from 6 April 2020 Budget changes). For disabled individuals or those in care homes: the final period exemption is extended to 36 months. Practical impact: a property sold in September 2026 is automatically exempt for the period from December 2025 to September 2026 (9 months before disposal) under PRR — regardless of whether the owner was there. CGT reporting: disposals of UK residential property must be reported to HMRC within 60 days of completion (UK residents — extended from 30 days from October 2021); payment of any CGT due within the same 60-day window via the UK Property Account online service. Non-UK residents: 60-day reporting applies to all UK property disposals (NRCGT). Joint ownership: each owner has their own PRR, lettings relief limit (£40,000 each), and annual CGT exempt amount — calculate separately for each owner. Scotland/Wales/NI: CGT is a reserved tax; the same TCGA 1992 rules apply across all four nations; Land and Buildings Transaction Tax (Scotland) and Land Transaction Tax (Wales) apply on purchase (not CGT — but relevant context for total tax cost of property investment)

Frequently asked questions