If you’re planning to sell or gift a residential property that has not always been your main home, understanding current Capital Gains Tax (CGT) legislation is vital. Changes implemented since 2020, including reporting deadlines and relief restrictions, can have a significant impact on your tax liability.
Our personal tax planning experts can help you navigate CGT rules and ensure you’re making tax-efficient decisions.
Letting relief is now restricted
Letting relief, once available to those who previously lived in a property before letting it out, now only applies if you shared occupancy with the tenant. This drastically limits eligibility for many landlords.
For example, if you let your former home after moving out, you can no longer claim up to £40,000 per owner in CGT relief unless shared occupation occurred throughout the let period.
Final period exemption reduced to 9 months
If a property has been your main home at any point, you may qualify for Private Residence Relief (PRR) for the last 9 months of ownership, even if you’ve lived elsewhere. Prior to April 2020, this exemption covered the final 18 months.
Longer relief periods still apply for certain individuals moving into care or living with a disability, up to 36 months in these cases.
60-day CGT reporting deadline
Since April 2020, UK residents disposing of UK residential property with a taxable gain must report and pay any CGT due within 60 days of completion.
This is done by submitting a CGT on UK Property Return online. Failure to comply could result in penalties and interest.
Worked example (2025 scenario)
Jane bought a house in 2008 for £300,000 and sells it in 2025 for £600,000. She lived in it for 10 years and then let it out for 7 years. Her gain is £300,000.
- PRR covers 120 months of residence plus 9 months of deemed occupancy = 129/204 months
- PRR exempts £189,706 (£300,000 × 129/204)
- Chargeable gain = £110,294
- Letting relief = £0 (Jane did not share occupancy)
- Less annual CGT allowance (£6,000 for 2025/26) = £104,294
- CGT at 28% (higher-rate taxpayer) = £29,202
Jane must report and pay CGT by submitting a return within 60 days of sale completion.
Planning ahead for 2025 and beyond
Review your property portfolio and consider CGT implications before selling. Key actions to consider:
- Understand your current and potential Capital Gains Tax liability
- Evaluate tax relief options—such as joint ownership with a spouse
- Time property disposals to make the most of annual exemptions
Our tax specialists are here to support your CGT planning to help you stay compliant and tax-efficient.
