Principal private residence relief


Written by Ray Coman


Each taxpayer, or each married couple, is entitled to dispose of their home, or principal private residence (PPR), without liability to capital gains tax (CGT.)

The amount exempt from CGT is the proportion of the gain relating to the period in which the property was a PPR.


A dwelling for PPR purposes includes a house, buildings attached or close to it and grounds and up to half a hectare. In exceptional cases a larger area of grounds may be considered part of a dwelling.


Currently, there is no minimum period of occupation required to prove that a residence was a person's PPR. However, evidence to substantiate that a property was occupied by a person may be insubstantial where the period of occupation is comparatively fleeting. In practice, a record of change in address on the electoral register, HMRC correspondence and utility bills are useful in demonstrating occupation of a property.


Deemed periods of occupation


Principal private residence relief is based on the number of months in which a property is occupied by its owner as a proportion of the total number of months in which that property is owned. However, in calculating the PPR relief, certain deemed periods of occupation can be taken into account. The deemed periods of occupation only apply provided that there is an actual period of occupation at some point before and after the period of absence. These include:


  • Any periods of absence (for whatever reason) that do not in total amount to more than three years; and
  • Any period, no matter how long, where the owner (or the spouse of the owner) was employed abroad; and
  • Any period or periods of absence totalling more than four years where the owner (or the owner's spouse) was working elsewhere in the UK, or had to live elsewhere for work reasons.
  • There is a deemed period of occupation where an individual cannot move into a dwelling house immediately, due to building works, provided the work is completed within 12 months of the owner acquiring the property.
  • Any deemed period of absence, only applies where the owner does not have another residence that qualified for PPR during the period of absence.


A final period of ownership is a deemed period of occupation, regardless of whether the property is occupied at all during the period, and even if another property also qualifies as a principal private residence at the time. The final period is currently 18 months (and was 36 months up to 5 April 2014.)


Principal private residence relief will apply for a deemed period of absence regardless of whether the property let or is left vacant.  However, it is only possible to have one PPR at any time.  Therefore, a deemed period will typically only apply where the owner has rented while away.


Letting relief


If the period of absence is a not a deemed period of occupation, then a further relief is available where a property is let that has been the owner's home. Letting relief is available regardless of whether the letting period is before or after the occupation of the property by its owner. The relief is the lower of:


  • The gain attributed to the period that the property was let, i.e. taking the dominator as period of ownership and nominator as period in which it was let;
  • Any gain already exempt due to principal private residence relief; and
  • £40,000.


The £40,000 cap is per owner, and so if the property is owned by a husband and wife there is a potential £80,000 letting relief. Letting relief can neither turn a gain into an allowable loss, nor increase an existing loss.

Principal private residence relief can significantly reduce capital gains tax. In an increasingly mobile world, the relief offers a key opportunity to lower liability to tax. Please consult Coman & Co for further information.


#9 Ray Coman, FCCA, CTA 2019-05-31 19:08
Dear C. Jaeger,

It depends. For any periods during which the couple owned the property that they lived abroad, the period of absence would not be a deemed period of occupation. This is because it is only possible to have one PPR at any one time. The place that is a PPR is determined the facts, i.e. of where that couple is actually living. If the couple did not own the property that they lived in while outside the UK, the period during which at least one spouse was employed aboard would be a deemed period of absence.
#8 C. Jaeger 2019-05-31 18:00
Uk property was lived in as a primary residence for 6 years. husband was posted to work abroad. during period of absence the property was rented. Since the whole family moved abroad neither husband nor wife are UK tax resident. It would appear that if husband/wife were to come back to live in the property, period of absence would be a deemed period of occupation due to job posting abroad, using letting relief would not be necessary as entire period of absence would be deemed period of occupation since the owner (or the spouse of the owner) was employed abroad. If we were to sell the property while living/employed abroad without returning to the property to live in as a primary residence, CGT would be chargeable from April 2015. Is this the correct interpretation of the above ?
#7 Ray Coman, FCCA, CTA 2018-10-11 14:10
Dear Joshua,

You are entitled to an exemption from CGT on your home. Therefore, even if you only own one property, if this is not your home, then you would not be eligible for capital gains tax relief.
#6 Joshua 2018-10-11 14:08
Hi, will i have to pay CGT on my flat when i sell, if my sister lived in the flat instead of I. I myself lived at another address (with family) so was not a second home that i own or anything.
Kind regards
#5 Sergio Lourenco 2016-03-22 12:42
Dear Ray Coman,
Thank you.
#4 Ray Coman, FCCA, CTA 2016-03-22 12:38
Dear Sergio,

There is no capital gains tax due until your father disposes of the property. If and when he disposes of it, some relief may be due because it has been his home and because he he let out a property that was once his home.
#3 Sergio Lourenco 2016-03-22 12:00
I'm contacting because i need some advice because my father will sell a house in London and we need some advice on capital gains tax.
The house was bought 10 years ago in a buy to let mortgage.
My father moved on in last November and changed the the mortgage to his main home last January.
Is there any capital gains tax due? is there a way to reduce it? How long should he maintain the house as his main residance before sell it so that there are no capital gains due?
Thank you for your help.
#2 Raphael Coman, FCCA, 2015-12-10 14:18
I understand that you you are required to live in certain accommodation for your job and you own another property. The second property could be eligible for principal private residence relief if this second property is where you intend to live in due course. For instance, if you are required to live in the vicarage but intend to retire to another property that you own, the property that you currently let could be eligible for PPR for the period during which you rent at the vicarage.

If you do not intend to live in the second property then there would be not be eligible for PPR relief.

Further information can be found at TCGA92/S222 (8)
#1 A. Perris 2015-12-09 15:36
As a clergyman, required to live in a vicarage, can I claim a rented property as my principle private residence even though I don't intend to live in it ?

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