If you once lived in a property and have since let it out, Principal Private Residence Relief is usually the single biggest number on your eventual CGT computation. Get it right and a large chunk of the gain is simply exempt. Get the residence test or the Lettings Relief position wrong and you can hand HMRC tens of thousands of pounds that you did not need to pay. Principal Private Residence Relief (PRR) under sections 222 to 226 of the Taxation of Chargeable Gains Act 1992 exempts the proportion of your gain that falls in the period the property was your only or main residence, plus the final 9 months of ownership.

The relief rewards the period you actually lived there and adds two extensions on top: the final-9-months rule (which always applies once the property has at some point been your main residence) and the deemed-occupation rules under s.223(3) (which preserve PRR over absences for work or other reasons). Lettings Relief under section 223B, inserted by Finance Act 2020 with effect from 6 April 2020, now reaches only narrow shared-occupation cases, and that 2020 change is what catches most accidental landlords out.

This page sits inside the wider CGT on UK property guide; the rate you will pay on whatever PRR does not exempt is in the 2026/27 CGT rates page, and the deadline for reporting and paying is in the 60-day CGT payment deadlines guide.

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The section 222 framework

Section 222 TCGA 1992 carries the core relief. The exempt gain is the proportion that falls in the period the property (or part of it) was your only or main residence, worked out on the time-apportionment formula. Sections 223 (final period and deemed occupation), 223B (Lettings Relief), 224 (apportionment for mixed use) and 225 to 226 (trust property, dependent relatives, job-related accommodation) fill in the rest.

In practice the same handful of questions decide your claim. Was the property genuinely your main residence at some point (s.222(1))? Which months count as a qualifying period (s.222 with s.223)? Does Lettings Relief reach your letting (s.223B)? Does the half-hectare permitted area cover your grounds, or do you have to argue a larger area on a 'reasonable enjoyment' basis (s.222(2) and (3))? Is any part carved out by exclusive business use (s.224)? And, if you are part of a couple or have separated, does the nomination election or the s.225B post-separation rule apply?

Eligibility and the only-or-main-residence test

The property must have been your only or main residence at some point while you owned it. A property that was a buy-to-let from the day you bought it gets no PRR at all, at any percentage. The test is binary, not graduated: it either was your home at some point or it was not.

HMRC's working position on the quality-of-occupation test (set out at CG64427 onwards) follows Goodwin v Curtis [1998] 73 TC 478: the question is whether your occupation had 'some degree of permanence, some degree of continuity or some expectation of continuity'. A brief stay with no intention to settle, even if you slept there and had your post sent there, may not qualify. The factors HMRC weighs:

  • Whether you actually moved in (furniture, belongings, household effects)
  • Council tax registration in your name at the address
  • Utility accounts (gas, electricity, water) in your name
  • Electoral roll registration at the address
  • Personal correspondence sent to the address (bank, employer, GP, dentist)
  • How long you stayed (weeks vs months vs years)
  • Whether you had another residence available

The property must be in the UK or, if it is overseas, you must meet the specific s.222B residence conditions for the relief to apply. Almost all landlord PRR work concerns UK property.

The time-apportionment formula

PRR is computed on a time-apportionment basis:

PRR exempt amount = (qualifying period / total ownership period) × total chargeable gain

Where:

  • Qualifying period = actual occupation as main residence + deemed-occupation periods (s.223(3)) + the final 9 months (s.223(1))
  • Total ownership period = the gap between acquisition and disposal, measured in months

The formula runs on your total chargeable gain (sale proceeds, minus base cost, minus allowable costs). The exempt amount comes off that gain. Whatever is left after PRR and Lettings Relief is then reduced by your £3,000 AEA before CGT bites at 18% or 24%.

The final 9 months rule (section 223(1))

Section 223(1) TCGA 1992 treats the last 9 months of your ownership as if you were still living there as your main residence, as long as the property genuinely was your main residence at some point. It does not matter that you had moved out and let it during those final months: you still get the exemption. The current 9-month figure has applied since 6 April 2020.

Disposal dateFinal-period exemptionNote
On or after 6 April 20209 monthsCurrent rule (FA 2020)
6 April 2014 to 5 April 202018 monthsReduced from 36 months by FA 2014
10 December 2003 to 5 April 201436 monthsPre-2014 standard rule
Disabled persons / long-term care (any era)36 monthsSpecific conditions per CG64985

The rule recognises that when you sell a former home there is usually a gap at the end when it is on the market but empty. The 9-month figure roughly matches a typical UK sale from listing to completion. Source: HMRC manual CG64985.

Deemed occupation: when absence still qualifies (section 223(3))

Section 223(3) TCGA 1992 lets certain periods when you were actually away count as occupation for PRR, subject to a bookend requirement: the property must have been your main residence both BEFORE and AFTER the absence (or, in some cases, you were prevented from returning by reasons the same provision recognises). The three categories:

  • Any-reason absence (s.223(3)(a)): up to 3 years in aggregate over your ownership. Several shorter absences (a year here, two years there) can be added together up to the 3-year ceiling. The bookend rule applies: you must have actually moved back in and used it as your main residence after the absence.
  • Work-abroad absence (s.223(3)(b)): no length limit while you were employed or self-employed outside the UK. If you are seconded overseas for a five-year contract and let the property while you are gone, you can preserve PRR across the whole absence, provided the bookend rule is met (you returned and resumed main-residence use, or could not return for reasons HMRC accepts).
  • Work-UK-elsewhere absence (s.223(3)(c)): up to 4 years where your UK work location made it impractical to live at the property. A common case is a teacher posted to a school 100+ miles away with accommodation provided by the employer. The bookend rule applies here too.

The three categories stack: across a long ownership you can use all three, building up substantial deemed-occupation cover. The detailed conditions and the bookend interpretation are in HMRC manuals CG65000 to CG65040, and Owen v Elliot [1990] STC 469 is the relevant authority on the genuineness of occupation.

Worked time-apportionment example

Mark and Sarah jointly own a property in Leeds that they bought in March 2010 for £200,000 plus £1,500 SDLT, £800 legal fees and £400 survey costs. They lived in it as their main home from March 2010 until February 2016 (6 years, 72 months), then bought a larger family home and let the Leeds property to tenants from March 2016 onwards. They did not share the property with the tenants, having moved out. They sell in March 2026 for £450,000 with £8,000 of disposal costs.

Step 1: total chargeable gain

  • Net sale proceeds: £442,000 (£450,000 − £8,000)
  • Base cost: £202,700 (£200,000 + £1,500 + £800 + £400)
  • Total chargeable gain: £239,300

Step 2: PRR computation

  • Total ownership period: 16 years (192 months)
  • Actual occupation as main residence: 72 months (March 2010 to February 2016)
  • Final 9 months: already covered by the 192-month total (months 184 to 192)
  • Qualifying period: 72 + 9 = 81 months
  • PRR exempt amount: 81/192 × £239,300 = £100,949
  • Residual chargeable gain after PRR: £239,300 − £100,949 = £138,351

Step 3: Lettings Relief check

  • The tenants were not in shared occupation with Mark and Sarah during the letting period (Mark and Sarah had moved to a different property). Lettings Relief under post-2020 s.223B does NOT apply.
  • (Pre-2020 framing would have allowed up to £40,000 of Lettings Relief here. That framework was repealed by FA 2020. The disposal in March 2026 falls under post-2020 rules even though the letting started in 2016.)

Step 4: split between spouses and apply AEAs

  • Mark's half-share of residual gain: £69,175
  • Sarah's half-share of residual gain: £69,175
  • Less Mark's £3,000 AEA: £66,175 taxable
  • Less Sarah's £3,000 AEA: £66,175 taxable

Step 5: rate application

Assume Mark earns £75,000 of employment income in 2026/27 (higher-rate throughout for his gain) and Sarah earns £30,000 (basic-rate with £20,270 of unused basic-rate band).

  • Mark: £66,175 × 24% = £15,882
  • Sarah: £20,270 × 18% + £45,905 × 24% = £3,649 + £11,017 = £14,666
  • Combined household CGT: £30,548

Without PRR (hypothetical), the £239,300 chargeable gain would have produced a CGT bill in the region of £55,000-£57,000. PRR has saved £24,000-£26,000 in CGT on a single disposal. The split-ownership structure preserves both AEAs and uses Sarah's basic-rate band, saving a further £1,200 versus a single-owner higher-rate computation.

The half-hectare permitted area (section 222(2))

Section 222(2)(b) TCGA 1992 sets the default permitted area at 0.5 hectares (about 1.24 acres), including the footprint of the house itself. Within that area, PRR covers the house and the garden and grounds on the same basis.

If your garden and grounds run to more than 0.5 hectares, the excess does NOT automatically get PRR. You have to show, under s.222(3), that the extra land is 'required for the reasonable enjoyment of the dwelling-house as a residence, having regard to the size and character of the dwelling-house'. The test is objective (what is reasonable for a house like this) not subjective (what you happened to enjoy having).

The leading case is Longson v Baker [2001] STC 6: a country house with 7.5 acres failed the 'reasonable enjoyment' test because the extra acreage was not objectively needed for a house of that size and character. If you are selling a property with extensive grounds, paddocks, stables or amenity land, expect to make a fact-specific argument and often to get formal valuation evidence splitting the gain between the house-plus-permitted-area and the excess. HMRC's working position is in CG64815-CG64835.

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Mixed use and exclusive business use (section 224)

Section 224 TCGA 1992 restricts PRR where part of the dwelling-house is used 'exclusively for the purposes of a trade, business or profession'. The exemption is apportioned to remove the exclusively-business-use portion.

The word 'exclusively' is doing all the work. A dedicated home office that is never used for anything personal (no family use, no guests, no overnight stays) is carved out of PRR. A study or office that doubles as a guest bedroom, family computer room or homework space is not 'exclusively' business and stays inside PRR.

This is a common trap if you are self-employed and work from home: claim 100% of a room as a business expense for income tax during ownership, and you have told HMRC the room is exclusively business, which triggers s.224 when you sell. The income tax you saved along the way (a few hundred pounds a year) is usually tiny next to the CGT cost on sale (a slice of the whole property gain). It is almost always better to claim a fair-and-reasonable share that keeps the room dual-use (say 75% business / 25% personal) rather than 100%.

HMRC's position on dual-use rooms and the s.224 boundary is at CG64690 to CG64710.

Lettings Relief: shared-occupation only since April 2020 (section 223B)

Section 223B TCGA 1992 was inserted by Finance Act 2020 with effect from 6 April 2020 and replaced the old Lettings Relief framework. The change was substantial. The relief that used to apply broadly to the let portion of a former home, with no requirement that you shared the place with your tenant, now only covers live-in landlord arrangements.

The post-2020 rule

Lettings Relief under s.223B applies only where you shared occupation of the home with your tenant during the let period. The typical case is a Rent-a-Room style set-up: you live in the property and let one or more rooms to lodgers, sharing common areas like the kitchen, bathroom and living room. You and the tenant must have shared the home as a single household for at least part of the letting.

The maximum relief is the lower of three amounts under s.223B(4):

  • (a) the PRR already given on the disposal
  • (b) £40,000
  • (c) the chargeable gain on the let portion (the portion of the gain attributable to the let period, after PRR has been applied)

If you own jointly, each of you can claim up to £40,000 of Lettings Relief on your own share of the gain, subject to the lower-of-three test on each computation.

What does NOT qualify

The classic accidental-landlord situation (you move out, let your former home to tenants, never share it with them) gets NO Lettings Relief under the post-2020 rules. The cut-off is the date you sell, not the date you started letting, per HMRC manual CG64710. Let a property from 2018 and sell it in 2026, and you get no Lettings Relief on any of that let period unless you shared occupation throughout.

This is the change that catches most accidental landlords by surprise, and it is where a lot of out-of-date advice still goes wrong. The old "£40,000 if it was your main residence at some point and you later let it" rule simply does not apply to a sale after 5 April 2020. The full detail is in the Lettings Relief specialist guide.

The one-main-residence rule for couples (section 222(6))

Section 222(6) TCGA 1992 says that spouses and civil partners living together can have only one main residence between them for PRR. If you have two or more residences available, the s.222(5)(a) nomination election lets you choose which one counts as the main residence. You must make the nomination within 2 years of any change in the residences available to you, both of you must sign it (s.222(6)(a)), and you can vary it later by further written notice.

If you are an unmarried couple, this rule does not bind you: each of you can have your own main residence, and they can be different properties.

If you have, say, a weekday flat in London and a weekend cottage in the country, the nomination decides which one gets PRR when you sell. Without an election, HMRC works out your main residence on the facts (where you actually spend most of your time, where your family is based, where you are registered for services). The planning point that matters is making the election and refreshing it whenever your available residences change.

For how to make and vary the s.222(5) election, see the two-properties election guide. Where you and your spouse jointly own a single home you both live in (so the s.222(6) one-residence rule applies between you), the joint-ownership PRR guide works through the mechanics.

PRR and the separating-spouse extension (section 225B)

Section 225B TCGA 1992 treats you as still occupying the former family home where it is transferred under a court order or separation agreement, so you keep PRR on the eventual sale even after you have moved out. It is the piece that stops a separating spouse losing PRR cover simply because they were the one who had to leave.

The provision was widened by Finance (No. 2) Act 2023 c.30 s.41(2)(6), in force from 6 April 2023. That widening extended the window for making no-gain-no-loss transfers between spouses under section 58 TCGA 1992 after separation: from the old limit of the tax year of separation, out to the end of the third tax year after separation (or until any court order, if that comes first).

Put together, if you leave the family home on separation you can:

  • Keep PRR cover under s.225B on the eventual sale, even though you no longer live there.
  • Transfer the home to your former partner under s.58 on a no-gain-no-loss basis for a much longer window (up to about 3.5 years from separation in some cases).
  • Use both together to manage the CGT on the eventual sale, often as part of the financial settlement.

For the full divorce-and-CGT picture, including how this sits within a financial settlement, see the divorce CGT guide; the s.58 inter-spouse transfer mechanics are in the spouse transfer guide.

Other reliefs interaction

PRR rarely sits on its own. The reliefs and allowances it most often interacts with:

  • £3,000 annual exempt amount: comes off whatever gain is left after PRR and Lettings Relief, and you each have your own AEA if you own jointly. See the AEA guide.
  • Capital losses: brought-forward losses (claimed within four years under TMA 1970 s.43) can be set against the taxable gain that is left after PRR and the AEA. See the capital losses guide.
  • Former Furnished Holiday Let: FHL was abolished from 6 April 2025 by Finance Act 2025 Sch 5, and a former FHL is now treated as standard residential rental for CGT. PRR still applies if the property was your main residence at some point; losing FHL status does not change that analysis. Business Asset Disposal Relief at the former 10% rate is closed for FHL disposals after 5 April 2025. The grandfathered position is in the FHL grandfathered claims guide.
  • Other ways to cut the CGT: PRR is one of ten levers in the reduce CGT survey.
  • Rollover relief (s.152): not generally available on a PRR-eligible property, because living in a property is not 'trade use' under s.155 Class 1 Head A. See the rollover relief guide.

Reporting after the disposal and records to retain

If PRR covers the whole gain, no CGT is due and (as a UK resident) you do not need to file a 60-day CGT on UK property return. The sale still goes on the SA108 capital gains pages of your Self Assessment return if you are otherwise within Self Assessment, with the PRR figure shown.

If PRR only covers part of the gain and there is still CGT to pay, you must file the 60-day return within 60 days of completion as a UK resident. You show the PRR figure there, and the gain that is left is taxed at the relevant rate. Non-UK residents have to file the 60-day return on any UK land disposal whether or not tax is due. The full mechanics are in the 60-day CGT deadlines guide.

The records to keep for a PRR claim:

  • Your original purchase contract, completion statement, SDLT return and receipt, and purchase legal invoices
  • The sale contract, completion statement, estate agent invoice and legal invoice
  • Evidence of when you lived there: council tax records, utility bills, electoral roll entries, GP and dentist registration changes, employer correspondence to the address
  • Evidence of any deemed-occupation period: employer letters confirming an overseas posting or UK work location, and written confirmation of your intention to return
  • For a Lettings Relief claim (post-2020 shared occupation): tenancy agreements showing shared common areas, and utility bills and council tax for the whole property in your name (HMO licensing is usually not needed at the shared-occupation scale)
  • For a mixed-use s.224 claim (where part was exclusively business): clear evidence of which space was business and over what period

HMRC's standard retention is 22 months after the end of the tax year if you are not in business, and five years and 10 months if you are. In practice, keep everything for at least six years after the sale, and longer if there is anything unusual in your PRR computation.

Sources and further reading