Glossary · UK
What is Letting Relief?
A CGT relief of up to GBP 40,000 when you sell a former main home that you also let out while sharing occupancy with tenants.
Full Definition
Letting relief is an additional Capital Gains Tax relief available when you dispose of a property that was at some point your main home but was also let out as residential accommodation. Prior to April 2020, letting relief was broadly available whenever a property had been both a main residence and a rental property, regardless of whether the owner occupied it alongside the tenants. Since April 2020, the relief is only available if the owner was in shared occupancy with their tenants at some point during the letting period -- that is, the owner lived in part of the property while also renting out a separate part of it. The maximum relief is the lower of: the amount of Principal Private Residence (PPR) relief available on the same property; the gain attributable to the letting period; or GBP 40,000. Letting relief cannot be used to create a loss; it can only reduce the gain to nil. Because the shared-occupancy requirement severely limits its scope, letting relief is now primarily relevant to owner-occupiers who rent out a room in their own home (rather than entire properties let out after moving away). Rent-a-Room relief, which exempts the first GBP 7,500 of rental income per year from a lodger in your main home, is a separate relief that may also apply alongside letting relief. The interaction with PPR relief means it is important to calculate both reliefs precisely, tracking the exact periods of occupation, letting, and absence for each property.