Private Residence Relief (PRR) is the most valuable Capital Gains Tax exemption available to individual UK property owners. Where a property was at some point the owner's only or main home, the gain that arose during the period of occupation is exempt from CGT. For landlords who lived in a property before converting it to a rental, or who plan to move back in before selling, PRR can substantially reduce the CGT bill.
Since April 2020, the landscape has changed significantly. The final-period exemption was cut from 18 months to 9 months. Lettings Relief — which previously gave landlords up to £40,000 relief on the letting portion of a gain — was abolished for all but live-in landlords. Understanding exactly what remains available is essential to CGT planning for any landlord holding a former main residence.
How PRR works: the time-apportionment calculation
PRR exempts the fraction of the total gain that arose during qualifying periods of occupation. The calculation uses months (not years) as the unit:
- Step 1: Count the total months of ownership from acquisition to disposal
- Step 2: Identify the qualifying months — actual occupation as main home, plus any deemed periods (see below)
- Step 3: The exempt fraction is qualifying months ÷ total ownership months
- Step 4: Multiply the total gain by the exempt fraction to find the PRR exemption amount
- Chargeable gain: total gain minus PRR exemption minus Annual Exempt Amount (£3,000 in 2026)
The final 9 months: always exempt
The last 9 months of ownership always qualify for PRR, regardless of whether the property is occupied at the time — provided the property was the owner's main residence at some earlier point. This protects sellers caught in a slow market or a lengthy completion chain.
Before 6 April 2020, the final exempt period was 18 months (and had historically been 36 months). The reduction to 9 months significantly increased CGT exposure for landlords who had moved out many months before their property sold.
Qualifying periods: what counts as occupied?
In addition to actual periods of residence and the final 9 months, certain absences are treated as deemed periods of occupation:
- Any reason: up to 3 years of absence in total, provided the property was the main home both before and after the absence period
- Employment anywhere in the UK: any length of absence required by your employer, no cap, provided you lived in the property before and after
- Working abroad: up to 4 years of working abroad under employment, provided you lived in the property before and after (and the absence was due to employment duties)
- Important condition: most qualifying absences require that the property was actually occupied as the main home immediately before the absence began and immediately after it ended — otherwise the deemed-occupation treatment is lost
Lettings Relief: effectively abolished since April 2020
Prior to 6 April 2020, Lettings Relief allowed a landlord who had lived in a property before renting it to claim additional CGT relief of up to £40,000 per owner (£80,000 for a jointly owned property) against the gain arising during the letting period.
From 6 April 2020, Lettings Relief applies only where the owner was sharing occupancy of the property with the tenant during the letting period — in effect, only genuine live-in landlord situations. For landlords who let a property they no longer inhabit, Lettings Relief is no longer available. This was a significant increase in the CGT exposure of 'accidental landlords' who had lived in a property before renting it out.
Only one main residence at a time
PRR applies to your only or main home. If you own more than one residential property, you can only have one main residence for PRR purposes at any given time. From 2020, where someone first acquires more than one residential property, they must nominate which property is their main residence within 2 years of that event — a failure to nominate in time means HMRC will determine the question on the facts.
Couples (married or in a civil partnership) are treated as having a single main residence between them, so a property-owning couple cannot each claim PRR on different properties simultaneously.
CGT rates and the 60-day reporting rule
The chargeable residential property gain (the non-exempt portion after PRR and Annual Exempt Amount) is taxed at 18% for basic-rate taxpayers and 24% for higher-rate and additional-rate taxpayers (rates effective from 30 October 2024). CGT on UK residential property must be reported to HMRC and the tax paid within 60 days of completion — not the following 31 January Self-Assessment deadline. Missing the 60-day deadline triggers automatic penalties and interest.
Frequently asked questions
I bought a property, lived there for 3 years, then rented it out for 5 years before selling. How much PRR do I get?+
Total ownership: 8 years (96 months). Qualifying months: 36 (occupation) + 9 (final period) = 45. Non-qualifying: 96 − 45 = 51 months. PRR fraction: 45/96 = 46.875%. If your total gain is £80,000, approximately £37,500 is exempt and £42,500 is chargeable (then reduce by the £3,000 Annual Exempt Amount, leaving £39,500 subject to CGT at 24% = approximately £9,480 for a higher-rate taxpayer).
Can I claim Lettings Relief on my rental property gain?+
Only if you shared the property with your tenant throughout the letting period. For the vast majority of landlords who let a property they do not themselves inhabit, Lettings Relief was abolished with effect from 6 April 2020 and is no longer available. This was a significant change that many landlords are unaware of when planning a sale.
I need to live abroad for work. Will my property still qualify for PRR?+
Potentially yes. Periods of working abroad under an employment contract can qualify as deemed residence for PRR purposes for up to 4 years, provided you occupied the property as your main home before the absence and return to it afterwards. The employment must be under a formal employment contract — self-employment abroad does not qualify. Keep clear records of the employment arrangement and dates of absence.
My spouse also owns the property. Does that help with CGT?+
Yes. For a jointly owned property, each owner applies PRR to their own share of the gain. Both owners benefit from their own £3,000 Annual Exempt Amount. However, married couples and civil partners are treated as having a single main residence, so you cannot each claim PRR on different properties simultaneously.
When do I need to report and pay the CGT?+
Within 60 days of completion. Use HMRC's UK Property online reporting service. You must create or log into your Capital Gains Tax on UK property account on gov.uk, report the gain, calculate the tax, and pay. You also include the gain in your annual Self-Assessment return if you complete one. Missing the 60-day deadline incurs automatic penalties of £100 (up to 6 months late) rising to £300 or 5% of the tax, whichever is greater.