Capital Gains Tax When You Sell Property in the UK: Private Residence Relief Explained

In the UK, selling the home you've lived in is usually entirely free of Capital Gains Tax, thanks to Private Residence Relief (PRR). "Usually" is doing real work in that sentence, though — letting out part of the property, owning more than one home, or a large garden can all reduce the relief, and if there is any taxable gain on UK residential property, sellers face a strict 60-day reporting-and-payment deadline that catches a surprising number of people off guard.

Private Residence Relief: Full vs Partial

Under sections 222 to 226 of the Taxation of Chargeable Gains Act 1992, a gain on the disposal of a dwelling that has been your only or main residence throughout your period of ownership is fully exempt from Capital Gains Tax. If it was your main residence for only part of the time you owned it, relief is apportioned: the exempt fraction is based on the time it genuinely was your main home, plus an automatic final-period exemption (currently the last nine months of ownership count as exempt regardless of whether you were still living there, to cover the practical gap between moving out and completing a sale).

What Reduces or Breaks Full Relief

• Letting the property. Letting Relief was sharply cut back from April 2020 and is now only available where the owner was in shared occupancy with the tenant for the letting period, capped at the lesser of £40,000 or the amount of PRR otherwise due — a much narrower relief than the old rules, which applied to any letting.
• Business use. Using part of the home exclusively for business (not merely working from a spare room occasionally) can make that portion of any gain taxable.
• Garden or grounds over the "permitted area." Land beyond roughly 0.5 hectares (about 1.24 acres) can fall outside the relief unless you can show the larger area was genuinely required for the reasonable enjoyment of the house given its size and character.
• Owning more than one residence without a valid nomination. If you have more than one home, only one can be your "main residence" for PRR at a time; you can nominate which one within two years of the combination changing (for example, acquiring a second home), and failing to do so leaves HMRC to decide the question on the facts.

The 60-Day Reporting Deadline

Since 27 October 2021 (previously 30 days), anyone with Capital Gains Tax to pay on a UK residential property disposal must report the gain and pay the tax within 60 days of completion, using HMRC's online UK Property Account, separately from the normal Self Assessment timetable. UK residents whose gain is fully covered by PRR generally do not need to file a 60-day return at all. Non-UK residents face a stricter rule: every disposal of UK residential property must be reported within 60 days, regardless of whether there is a gain, a loss, or full relief — a rule that trips up UK expats who assume no gain means no obligation.

Current Rates for 2026/27

Capital Gains Tax on UK residential property is charged at 18% on gains that fall within your remaining basic-rate Income Tax band for the year, and 24% on any gain above that threshold. These rates apply to the portion of a gain that isn't covered by PRR — most sellers of a single main home with full relief never encounter them at all, but they matter for partial relief, second homes, and buy-to-let disposals. The annual tax-free Capital Gains Tax allowance for 2026/27 is £3,000 per person, a fraction of the £12,300 allowance available as recently as 2022/23 — it has been cut in successive tax years, so always check the figure for the specific tax year of the disposal rather than relying on an older number.

Sources & Further Reading

• Taxation of Chargeable Gains Act 1992, sections 222–226E
• HMRC, HS283 Private Residence Relief helpsheet
• GOV.UK, Capital Gains Tax rates guidance
• GOV.UK, guidance on reporting and paying Capital Gains Tax on UK property within 60 days

Practical Next Steps

Before selling, work out whether the property was your only or main residence for the whole period of ownership, and if not, whether letting, business use, or a second home affects the relief available. If there is any taxable gain, mark the 60-day clock from completion — not from when you file your annual return — since the property-specific deadline runs independently and penalties apply for missing it. For anything beyond a straightforward single-home sale, an accountant or tax adviser can confirm the numbers before you exchange contracts. For the general, worldwide mechanics of how capital gains tax works, see What Is Capital Gains Tax and How Does It Work?

This article is general legal information, not legal or tax advice, and covers the position in the UK generally understood to apply where the property is in England — Scotland and Wales share the same UK-wide Capital Gains Tax rules but have their own separate property transaction taxes. Consult a tax adviser before acting.