UK Capital Gains Tax Main Residence Relief 2026: Letting Relief and Absences

When you sell your home, any gain is usually exempt from Capital Gains Tax (CGT) thanks to Private Residence Relief (PRR) -- also known as Principal Private Residence Relief. But the relief is not automatic in every case. Periods of absence, renting out your home, and owning more than one property all create complexities that can result in an unexpected CGT bill.

The Basic Rule: Full Relief

If a property has been your only or main residence throughout the entire period of ownership, 100% of the gain is exempt from CGT. You do not need to report it and you owe nothing.

The position becomes more complex when:

• You rented the property out for a period
• You lived elsewhere for periods during ownership
• You have another property and need to nominate which is your main residence
• You purchased the property as an investment and later moved in, or vice versa

The Final Period Exemption: 9 Months

Even if a property was not your main residence right up to the point of sale, the final 9 months of ownership always qualify for PRR -- provided the property was your main residence at some point. This covers the period needed to find a buyer, go through conveyancing, and complete.

Before April 2020 the final period was 18 months, and before that it was 36 months. The reduction to 9 months was introduced in April 2020. For people who owned a property prior to April 2020 and are only now selling, this shorter period affects the calculation of the exempt fraction.

The final period exception is extended to 36 months for disabled homeowners or those moving into a care home.

Periods of Absence

Not every period away from your main residence breaks your PRR. HMRC allows certain deemed periods of occupation -- absences that are treated as if you were living in the property even though you were not:

1. Any reason -- up to 3 years total: You can be absent for any reason for up to 3 cumulative years (not necessarily consecutive) during the ownership period, and those years count as deemed occupation. The property must have been your main residence both before and after the period of absence (unless it was the last period before sale, where the 9-month rule applies instead).

2. Working overseas: If you are required to work wholly outside the UK, the entire period of overseas employment counts as deemed occupation, regardless of duration. On returning, you must re-occupy the property for the deemed residence to count.

3. Working elsewhere in the UK (job relocation): If your employment requires you to live somewhere other than your main residence anywhere in the UK, up to 4 years of absence can be treated as deemed occupation. As with overseas absence, you should ideally return to occupy the property when the employment ends, though HMRC does sometimes accept the relief where a return was intended but circumstances prevented it.

Letting Relief -- Abolished for Most Cases

Letting Relief used to be a significant additional exemption. If you rented out a property that had at some point been your main residence, you could claim up to GBP 40,000 of additional relief (GBP 80,000 for a couple) on the letting gain.

From 6 April 2020 Letting Relief was effectively abolished for most cases. It now only applies where the owner is in shared occupancy with the tenant -- that is, you are actually living in the property at the same time as you are letting part of it. Whole-property letting while you live elsewhere no longer attracts Letting Relief.

For properties where letting occurred before April 2020, there may still be some Letting Relief entitlement for that pre-April 2020 period under transitional rules. Any property that was let as a whole after that date while the owner lived elsewhere will not benefit.

Nominating Your Main Residence

If you own two or more properties and each has been used as a residence at some point, you can nominate which one is your main residence for PRR purposes. The nomination is made to HMRC within two years of first having two qualifying residences.

The nomination can be varied at any time during ownership -- you do not have to stick with the original election. This creates a planning opportunity: you can nominate a property as your main residence for a short period (even just a week) to reset the CGT clock on it, as long as you genuinely occupy it. The nomination must reflect actual occupation, not just a tactical letter.

The 60-Day Reporting Requirement

If you sell a residential property in the UK and a capital gain arises -- after applying PRR and the Annual Exempt Amount (GBP 3,000 in 2026/27) -- you must report it to HMRC and pay the tax within 60 days of completion. This applies even if you are registered for Self Assessment.

If PRR covers the entire gain, there is nothing to report and no 60-day deadline applies. But if there is any taxable residual gain (from letting periods, absence periods not covered by the deemed rules, or periods of non-occupation), the 60-day deadline is strict. HMRC charges automatic penalties and interest for late reporting.

CGT rates on residential property are 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers in 2026/27.

Practical Summary

PPR remains one of the most valuable tax reliefs available to homeowners. Understanding the 9-month final period, the deemed occupancy rules for absences, and the current limits of Letting Relief ensures you claim everything you are entitled to -- and avoids overpaying CGT on a property sale that should have been wholly or mostly exempt.