Private Residence Relief: selling your home without Capital Gains Tax

When you sell the home you have lived in as your only or main residence, the profit you make is usually free of Capital Gains Tax. This is because of a rule called Private Residence Relief, and HMRC's guidance is straightforward on the point: you may get tax relief if you sold a property that was your main home¹. For most people selling the house or flat they live in, that is the end of the matter: no taxable gain, no bill, and no report to HMRC.

The relief matters because Capital Gains Tax otherwise applies to property that is not your home, including buy-to-let properties, business premises, land and inherited property². The scale of the relief is large by any measure: HMRC's tax relief statistics put the cost of Capital Gains Tax private residence relief at £31,800 million in the 2024 to 2025 tax year, with a forecast of £32,900 million for 2025 to 2026³. In other words, the great majority of homes sold in the UK change hands without any Capital Gains Tax on the seller.

Where this page earns its keep is at the edges. Relief can be partial or lost altogether if the grounds are large, if part of the home was let or used for business, or if you moved out long before the sale completed. People who live abroad, own two homes, or sell a property inherited from someone who has died face their own rules. Each of those situations is covered below, with the figures HMRC and the legislation actually give.

No Capital Gains Tax on your only or main home

Capital Gains Tax is charged when you make a profit, called a gain, on selling or disposing of certain assets, and a second home is one of the assets it applies to⁷. The relief for a main home removes the family house from that net. HMRC's guidance on reporting and paying the tax states plainly that you may get tax relief if you sold a property that was your main home¹, and its guidance on selling property confirms that the tax otherwise falls on property that is not your home, such as buy-to-let properties, business premises, land and inherited property².

Two features of the relief shape everything else on this page. The first is that it is tied to the property being your home, not just to you owning it. A house you bought, lived in and then sold is in a different position from a flat you bought and rented out from day one, even if both are eventually sold at a profit. The second is that you do not get a bill for Capital Gains Tax: HMRC does not work out your liability and send you a demand, so it falls to you to know whether relief covers your sale or whether something is owed¹.

The relief is one of the largest single items in the UK tax system. HMRC's statistics show the cost of private residence relief running at £28,600 million in 2023 to 2024, £31,800 million in 2024 to 2025, and a forecast £32,900 million in 2025 to 2026³. Those figures are the tax the government forgoes because home sales are relieved, and they explain why the rules around the edges of the relief are drawn as tightly as they are.

If your sale falls entirely within the relief, there is nothing to report for that gain. If any part of the gain is not covered, the reporting rules in the later sections apply, and they have deadlines attached. The general guide to Capital Gains Tax covers how the tax works across all assets.

Who qualifies for full relief

Full relief belongs to the person whose home the property was. For UK residents selling the home they lived in, the relief follows the periods of ownership during which the property was the only or main home. HMRC's guidance for people selling a UK home while living abroad sets out the shape of the test in a way that illuminates the domestic rule too: in most cases you do not pay any tax for any tax years in which you, your spouse or civil partner spent at least 90 days in your UK home, provided you nominate the home as your only or main home when you tell HMRC you have sold it⁴.

The nomination point matters for anyone with more than one home. If you own a city flat and a country cottage, only one of them can be your main home at a time, and it is the home you occupied as such that attracts the relief. For non-residents the nomination is a formal step made in the report to HMRC; for residents the position is usually established by the facts of where you actually lived, but the underlying principle, that relief follows genuine residence in the property, is the same.

There are also special cases in the guidance on selling property. If the property was occupied by a dependent relative, you may not have to pay². And gifts to your husband, wife, civil partner or a charity are usually not taxed, which matters when a home is passed on rather than sold². What does not qualify is a property that was never your home at all: a buy-to-let flat bought and let from the outset sits outside the relief entirely, and the rates in a later section apply to the whole gain.

Final nine months: covered even after you move out

One of the most useful features of the relief is that it does not stop the moment you move out. HMRC's guidance states that you get full tax relief for the last 9 months you own your home if you qualify for tax relief for any period⁴. This is called the final period exemption, and it exists because selling a home takes time: people typically move into their next house before the old one completes, and without the final period those overlapping months would become taxable.

In practice the exemption covers the common chain scenario. You move out in March, the sale completes in August, and the months in between are treated as covered by the relief rather than as a gap in which the property was no longer your home. The exemption applies to the last nine months of ownership as such, so it does not depend on why you moved out or whether the property stood empty in the meantime.

The final period bridges the gap between moving out and completion.

The limit is a hard one. If the sale completes more than nine months after you moved out, the months beyond the exemption are not covered, and a proportionate part of the gain becomes chargeable. The nine month period is also the window within which the other rules on this page, on large grounds and on parts of the home that were let or used for business, bite hardest, because those restrictions apply to the final period itself⁴.

Up to 36 months for disabled people and those moving into care

The final period is longer for people in two situations. HMRC's guidance states that if you are disabled or in long-term residential care, the final period is 36 months⁴. Three years instead of nine recognises that someone moving into a care home, or someone whose disability makes moving and selling a home a slower process, should not lose relief simply because the sale takes longer to arrange.

The extended period works in the same way as the standard one. The last 36 months of ownership are treated as covered by the relief, provided you qualify for relief for some period of ownership. So a person who moves into residential care and whose former home is sold two years later remains within the exempt window; a sale four years later would leave the months beyond the third year outside it.

Two points are worth checking against your own position. First, the test is disability or long-term residential care, and the guidance does not extend the 36 months to other reasons for a delayed sale, such as a slow housing market or a probate dispute. Second, the extended final period interacts with the restrictions in the next section: for any part of the home that was never lived in because it was let out or used for business, no relief for the final period is given at all, whatever its length⁴.

When relief is only partial: letting and business use

Relief can be reduced rather than lost, and the two common causes are large grounds and parts of the property that were not lived in. On grounds, HMRC's guidance is specific: you may still owe tax if the grounds of your home, including all buildings, were greater than 5,000 square metres, just over an acre, in total⁴. The area that counts includes the garden and the buildings on it, not just the footprint of the house.

Where the grounds exceed the limit, the relief is scaled rather than withdrawn. The guidance states that you only get some tax relief for the final period if the grounds, including all the buildings, were greater than 5,000 square metres in total⁴. In other words, the exempt area is capped, and the gain attributable to the excess land is chargeable. For a house with extensive grounds this can be a substantial figure, and it is the reason large-country-house sales are one of the main sources of taxable gains on former homes.

The second cause is use of part of the property. You do not get any relief for the final period for any part of your home that you never lived in because you let it out or used it for business⁴. A self-contained annexe rented to a tenant, or a ground floor converted permanently into a workshop, falls into this category for the period and proportion concerned. Taking in a lodger is different, because you are still living in the property as your home, and HMRC's general guidance confirms relief may still be available where the property was your main home¹; the Rent a Room scheme has its own income tax rules for the rent itself.

Partial relief produces a part chargeable, part exempt gain, and the working out is covered in a later section. Where a sale produces a taxable element, the rates that apply are the residential property rates, 18% and 24%, not the general rates for other assets.

Second homes and buy-to-let: CGT rates of 18% and 24%

A property that was never your main home, a buy-to-let flat, a holiday home, a property bought and let from the outset, falls outside Private Residence Relief altogether. You also pay tax if you made a profit on selling or disposing of certain assets, such as shares or a second home⁷. For those sales the rates are set by legislation: for disposals on or after 30 October 2024, the main rates of Capital Gains Tax for individuals are 18% at the lower rate and 24% at the higher rate⁶.

Which of the two rates applies to you depends on your income tax position. The Budget rates and allowances tables set out the same pair from the other direction: an Income Tax basic rate payer pays 18% on gains on assets other than residential property and carried interest, and a higher rate payer pays 24%⁵. For residential property gains the 18% and 24% rates apply to individuals directly, with the portion of the gain falling within your basic rate band taxed at 18% and the remainder at 24%⁶. Personal representatives pay 24% on gains that are not residential property gains or carried interest gains⁶.

The annual exempt amount comes off first, then the two rates apply to what remains.

Before any rate is applied, the annual exempt amount comes off. For individuals and personal representatives it is £3,000⁵, a figure confirmed in the Autumn Budget 2024 rates and allowances⁸. You only pay Capital Gains Tax on profits above your Annual Exempt Amount⁷, and the allowance applies to your total gains for the year, not to each asset separately. The dedicated page on selling a second property covers that situation in full, and using capital losses explains how losses can reduce a chargeable gain.

How to work out the taxable gain on a home you sell

The gain itself is the difference between what you sold the property for and what you bought it for, adjusted for the costs of buying, selling and making improvements, and for any tax reliefs. When you report a disposal, HMRC needs the details of how much you bought and sold the asset for, the dates when you took ownership and disposed of it, other relevant details such as costs of buying, selling or making improvements and any tax reliefs, and the calculations for each capital gain or loss you report⁹.

For a home with partial relief, the working out has two stages. First the gain is calculated from the sale price and purchase price plus allowable costs. Then the relief is applied to the proportion of the ownership period, and of the property, that qualifies. The final period, nine months or 36 months, is treated as qualifying; periods when the property was not your main home are not; and the excess over 5,000 square metres of grounds is excluded from the exempt area⁴. What remains is the chargeable gain, from which the £3,000 annual exempt amount is deducted before the 18% and 24% rates are applied⁵.

One group has a different starting point. Non-residents only pay tax on any gain made since 5 April 2015⁴, so the calculation for someone living abroad begins with the property's value at that date rather than its original purchase price. For estates, the position is different again: when selling property belonging to the estate of someone who has died, you include the information when reporting the estate to HMRC².

Keep the paperwork. Because HMRC does not issue a bill for Capital Gains Tax¹, the calculation you make, and the records behind it, are what stand between you and an incorrect position, in either direction. The page on how to report and pay Capital Gains Tax walks through the reporting steps.

Reporting and paying CGT on a UK property sale

How you report and pay depends on whether you sold a residential property in the UK⁹. That distinction matters because UK residential property disposals have their own reporting route and their own deadlines, separate from the Self Assessment return that covers most other gains. The general guidance is that you must report all sales of property or land in the UK if you are not a UK resident, even if you have no tax to pay⁹.

For non-residents the deadline is explicit: you must tell HMRC you have sold the property within 60 days of transferring ownership, which is the conveyancing⁴. To qualify for the relief, you must nominate the home as your only or main home when you make that report⁴. The 60 day clock starts at completion, not at exchange, and the duty to report applies even where the relief, the annual exempt amount or a loss means nothing is owed.

The non-resident route: complete, nominate, calculate, report within 60 days.

Living abroad brings wider obligations too. You usually have to send a Self Assessment tax return if you live abroad and you rent out property in the UK, or you have taxable savings interest from UK banks or building societies, or various other sources of untaxed UK income¹⁰. Separately, you need to tell HMRC that you are moving or retiring abroad to make sure you pay the right amount of tax¹¹. The page on residence status when moving abroad covers that transition, and the Non-resident Landlord Scheme covers renting out UK property from overseas.

For UK residents whose entire gain is covered by relief, there is normally nothing to report for the disposal. Where a chargeable gain exists, the reporting route for residential property applies, and because no bill is issued¹, missing the deadline is the seller's risk, not HMRC's.

Couples, joint owners and inherited homes

Transfers between spouses are the cleanest case in the whole subject. Gifts to your husband, wife or civil partner are usually not taxed², so moving a home, or a share of one, between a couple does not trigger Capital Gains Tax at that point. The receiving spouse takes the property, and any tax is deferred until they sell or otherwise dispose of it. For non-residents, the days test is generous in the same direction: in most cases no tax is due for tax years in which you, your spouse or civil partner spent at least 90 days in your UK home⁴.

Joint owners who are not spouses each have their own position. Each owner is responsible for their own share of the gain, and the annual exempt amount of £3,000⁵ applies per individual, not per property. A jointly owned home lived in by both owners as their main home is relieved for both; a jointly owned let property is chargeable for both, in their respective shares. The page on how rental income is taxed for jointly owned property covers the income tax side of joint ownership.

Inherited homes sit in a third category. Capital Gains Tax is not charged on death itself; what matters is what happens next. If the estate sells the property, any increase in value between the date of death and the sale may be chargeable, and when selling property belonging to the estate of someone who has died, you include the information when reporting the estate to HMRC². If instead you inherit the property personally and it becomes your home, the relief can apply to your period of ownership as your main home, including the final period rules. A property occupied by a dependent relative is a further special case: you may not have to pay². The inheritance tax and residence nil-rate band pages cover the tax that can arise on death itself, which is separate from Capital Gains Tax.

Where to get help

The rules on this page are national: Capital Gains Tax is a UK tax and the relief, the final period and the rates apply the same way in England, Scotland, Wales and Northern Ireland. Property transaction taxes on buying, such as Stamp Duty Land Tax, Land and Buildings Transaction Tax in Scotland and Land Transaction Tax in Wales, are separate taxes on the buyer, not the seller, and do not affect the gain.

If your sale is straightforward, a home lived in throughout your ownership and sold within nine months of moving out, the position is usually clear enough to check yourself against HMRC's own guidance. If anything on this page describes your situation, large grounds, a part of the property let or used for business, a long gap between moving out and selling, or a home sold from abroad, the calculation is worth confirming before you rely on it, because no bill will arrive to alert you to a mistake¹.

Help is available from HMRC itself for questions about your own position, and the Self Assessment pages explain how a return covering gains is filed. If you believe HMRC has handled something wrongly, there is a formal route: how to complain about HMRC and escalate to the Adjudicator. For the wider picture of how gains, losses and the annual exempt amount fit together, see Capital Gains Tax: what is taxed, allowances and rates.