Private Residence Relief vs Lettings Relief CGT: 2026/27 Comparison
Private Residence Relief exempts from Capital Gains Tax the portion of a gain relating to the years a property genuinely was your only or main home, plus a final period of ownership regardless of use. Lettings Relief used to provide a further, separate reduction for periods a former home was let out β but since April 2020 it has been drastically restricted and now only helps in narrow shared-occupancy situations. This guide compares both for 2026/27.
Key facts for 2026/27
- Private Residence Relief (PRR) fully exempts the proportion of a capital gain relating to the period(s) a property was genuinely your only or main residence, plus an automatic final period of ownership (9 months, at the time of writing) that counts as deemed occupation regardless of how the property was actually used during that time β confirm the current final period length at gov.uk (HS283), as this can change.
- Lettings Relief was restricted from 6 April 2020 so that it now only applies where the owner was living in the property at the same time as the tenant (genuine shared occupancy) β it can no longer be claimed for periods where the owner had moved out entirely and let the whole property to someone else.
- Where Lettings Relief does still apply, it can reduce the chargeable gain relating to the letting period by the lowest of: the amount of Private Residence Relief already given, the amount of the gain arising from the letting, or a fixed maximum cap β check gov.uk for the current cap figure, which has been stable since the 2020 restriction but is not fixed within this comparison's verified rate set.
- Capital Gains Tax on residential property gains for 2026/27 is charged at 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers, on gains above the Β£3,000 Annual Exempt Amount, after any Private Residence Relief and Lettings Relief have been applied.
- UK residential property CGT disposals must generally be reported and any tax paid within 60 days of completion, using HMRC's UK Property Account, separately from a Self Assessment return.
Side-by-side comparison
| Feature | Private Residence Relief | Lettings Relief (post-April 2020 rules) |
|---|---|---|
| What it covers | The whole period the property was genuinely your only or main home, plus the final period of ownership | Only periods of genuine shared occupancy with a tenant, since April 2020 |
| Applies to a period the whole property was let to someone else while you lived elsewhere | No β that period does not qualify for PRR itself (it may fall within the final period exemption) | No longer β this was exactly the situation the 2020 restriction removed relief from |
| Cap on the relief | No cap β 100% exemption for qualifying periods of actual or deemed occupation | Capped at the lowest of three specific figures β check current cap at gov.uk |
| Availability since April 2020 | Unchanged β still the core relief for a main residence | Drastically narrowed β now only helps in shared-occupancy cases |
| Final period exemption | Automatic β the last period of ownership counts as deemed occupation regardless of actual use | Not applicable β this is a PRR feature, not a Lettings Relief feature |
| Typical relevance today | Relevant to almost everyone selling a property that was ever their main home | Relevant only to a small subset of owners who genuinely lived with a tenant |
| Reporting deadline for any CGT due | Within 60 days of completion via the UK Property Account | Within 60 days of completion via the UK Property Account |
How Private Residence Relief actually works
Private Residence Relief exempts from Capital Gains Tax the proportion of a gain that relates to the period(s) during which a property was genuinely the owner's only or main residence. If a property was your main home for the whole of your ownership, the entire gain is typically exempt. If it was your main home for only part of the ownership period β for example, you lived in it for several years, then moved out and let it to tenants before eventually selling β the gain is apportioned between the exempt (main residence) period and the potentially chargeable (let-out) period, based on the number of months in each.
A crucial feature of PRR is the final period exemption: the last period of ownership before sale is automatically treated as deemed occupation, and therefore exempt, regardless of how the property was actually used during that time β even if it was let to tenants right up until completion. The length of this final period exemption has changed over the years (it was reduced from 18 months to 9 months in April 2020, alongside the Lettings Relief restriction) β always check HMRC's current Helpsheet HS283 for the exact length applying to your disposal.
PRR requires no separate claim or cap β it applies automatically to qualifying periods of actual or deemed occupation, based on the facts of how and when the property was used as a main residence.
The April 2020 restriction to Lettings Relief
Before 6 April 2020, Lettings Relief provided a valuable additional reduction to the chargeable gain for any period a former main residence was let out to tenants after the owner moved out, on top of the relief already given by Private Residence Relief for the period of actual occupation and the (then longer) final period exemption. This made it common and often very tax-efficient for someone to move out of their home, let it to tenants for a period, and still benefit from significant additional relief on eventual sale.
From 6 April 2020, the rules changed dramatically: Lettings Relief now only applies where the owner was living in the property at the same time as the tenant β that is, genuine shared occupancy, such as renting out a room or part of the home while still living there. It no longer applies at all to the much more common situation of an owner moving out entirely and letting the whole property to someone else, which is the scenario that most "accidental landlords" (people who moved and kept their old home as a rental) previously relied on.
This restriction, combined with the reduction of the final period exemption from 18 months to 9 months in the same reform, significantly increased the Capital Gains Tax exposure for many owners selling a former main residence that had been let out for an extended period after they moved elsewhere.
Illustrating how the two reliefs interact today
Consider, for illustration, someone who owned a property for 10 years: they lived in it as their main home for the first 6 years, then moved out and let the whole property to tenants for the remaining 4 years before selling. Under current rules, Private Residence Relief exempts the gain relating to the 6 years of actual occupation, plus the final period of ownership (currently 9 months, at the time of writing) counted as deemed occupation regardless of the letting. The remaining period of letting, beyond the final period exemption, is chargeable to Capital Gains Tax, with no Lettings Relief available at all, because the owner did not live in the property at the same time as the tenant during that period.
Contrast this with an owner who let out a single spare room to a lodger while continuing to live in the property throughout β because this is genuine shared occupancy, any gain relating to that let portion may still benefit from Lettings Relief, capped at the lowest of the specific limits set out in the rules, in addition to Private Residence Relief and the separate Rent-a-Room Scheme (which is a different relief covering the rental income itself, not the capital gain).
This example is illustrative only β the actual calculation depends on precise dates of occupation and letting, the current final period exemption length, and the current Lettings Relief cap, all of which should be confirmed from HMRC's current Helpsheet HS283 or a tax adviser before completing a real Capital Gains Tax calculation.
Verdict
For anyone selling a property that was genuinely their main home at some point, Private Residence Relief remains the central, automatic relief protecting the gain relating to the occupation period and the final period of ownership, whatever the current length of that final period turns out to be.
Lettings Relief, since the April 2020 restriction, is now relevant to a much smaller group of owners β essentially only those who genuinely shared their home with a tenant while still living there β and no longer helps the common "accidental landlord" situation of moving out and letting the whole property.
Anyone with a former main residence that has been let out for an extended period after moving elsewhere should get a specific Capital Gains Tax calculation from an accountant before selling, given how significantly the 2020 reforms reduced the relief available compared with the pre-2020 rules, and should not assume older commentary about Lettings Relief still applies to their situation.