Principal Private Residence Relief: Complete CGT Guide 2026

PPR Basics

Principal Private Residence relief is found in ss222–226B TCGA 1992. It exempts the gain on a dwelling house — plus its garden and grounds — from Capital Gains Tax where the property has been your only or main residence throughout your period of ownership. If the property has been your main residence for the entire ownership period, the gain is 100% exempt: you pay no CGT at all.

Three conditions must be met. First, the property must be a dwelling house — a building or part of a building used as a residence. Second, it must have been your residence — not merely owned but actually occupied. Third, it must be your only or main residence — if you own more than one home, PPR fully exempts only the one you nominate or that HMRC determines to be your main residence.

The grounds included in PPR extend to 0.5 hectares (about 1.24 acres), including the area the house itself stands on. Where the grounds exceed 0.5 hectares, you can argue that a larger area is required for the reasonable enjoyment of the property — but this is a facts-based argument and larger permitted areas are granted only in limited circumstances.

The Final 9 Months Rule

Even if you have moved out of your home before selling it, the final 9 months of ownership are automatically treated as qualifying for PPR. This relief does not require any election and applies regardless of what you are doing in that 9-month period — you could be renting somewhere else, living abroad, or staying with family.

The 9-month final period was cut from 36 months (3 years) in April 2014 and then from 18 months in April 2020. The reduction significantly increased CGT exposure for people who struggle to sell quickly after moving, particularly in slow housing markets.

There is one exception: if you (or your spouse or civil partner) are disabled or have moved into a care home, the final exempt period remains 36 months rather than 9 months. This longer period helps in situations where the property is retained while care arrangements are organised.

Periods of Absence

HMRC permits certain periods of absence from your main residence to still count as qualifying periods for PPR, provided you occupied the property as your main residence both before the absence and after it (unless prevented by your job from returning). There are three categories of exempt absence:

These periods of absence can be combined — for example, 2 years abroad followed by 2 years of general absence. Careful record-keeping of dates and reasons for absence is essential.

Two-Home Scenario and Nomination

If at any point you own two or more residential properties, you must decide which is your main residence for PPR purposes. You have two years from the date on which you first owned more than one property to make a nomination election to HMRC. The election must be in writing and signed by both spouses or civil partners if the property is jointly owned.

Once made, the nomination can be varied at any time — the variation takes effect from the date of the new election. Importantly, the final 9 months of ownership of the previously nominated property also qualifies for PPR automatically after a switch. This means a brief nomination of a property before sale can secure the 9-month exemption even if the property was not otherwise your main residence.

If you fail to nominate within two years, HMRC will determine your main residence based on factual evidence. They will look at: where you sleep, where your family lives, where you are registered with a GP and dentist, where you are on the electoral roll, where you receive correspondence, and how much time you spend at each property. No single factor is decisive.

Partial Exemption: Letting Out Part of Your Home

If you let out a room or part of your home while you continue to live there, the portion you occupy yourself remains fully covered by PPR. The gain attributable to the let portion is calculated on a floor-area or other reasonable apportionment basis.

Lettings relief — which formerly gave an additional exemption of up to £40,000 per owner on the let portion — was substantially restricted from April 2020. It now only applies where the owner is in shared occupation of the dwelling with the tenant at the same time. A live-in landlord with a lodger can still claim lettings relief (capped at the lower of £40,000, the PPR gain, or the let-portion gain). A landlord who has moved out and rented the whole property cannot.

Divorce and PPR

When a couple separates, the spouse who leaves the family home faces a potential CGT issue: they no longer occupy the property, so their PPR is eroding. Before March 2023, the departing spouse retained PPR for only 9 months after leaving.

From 6 April 2023, HMRC extended the PPR protection for separating couples. The departing spouse now retains PPR for the longer of: (a) the final 9 months of ownership, or (b) until the end of the tax year of separation, provided certain conditions are met. In practice this gives considerably more time for the property to be sold or transferred without CGT arising on the absent spouse's share.

Additionally, from April 2023, no-gain/no-loss CGT treatment was extended to transfers between separating spouses up to three years after the tax year of separation (previously just the tax year of separation). Transfers under court orders get no-gain/no-loss treatment indefinitely.

Mixed-Use Property and Development

Using part of your home exclusively for business purposes can restrict PPR. A room used wholly and exclusively for business (rather than occasionally, as many home-workers do) creates a portion of the gain that is chargeable to CGT. HMRC usually accepts that occasional business use does not restrict PPR.

Garden development is a common trap. If you sell your garden or a plot within your grounds to a developer — separately from the house — and the land sold is within the 0.5 hectare permitted area, PPR can still apply provided the house is sold at the same time or before. But if the house is sold first and you later sell the garden separately, no PPR is available on the garden sale.

There is also a risk that repeated property development — buying, renovating and selling homes — could be treated by HMRC as a trading activity rather than investment. In that case, gains become trading profits taxed as income, not capital gains, and PPR is irrelevant. A single sale is unlikely to be challenged; a pattern of transactions is.

When to Seek Advice

Several situations call for professional advice before completing a property sale:

• Non-UK residents — since April 2015, non-residents must file a UK CGT return within 60 days of completion even on a PPR-exempt property
• Properties held in trust — complex rules apply to trustee occupation and beneficiary occupation
• Inherited properties — the interaction of probate value, the nil-rate band and PPR requires careful calculation
• Properties with large grounds exceeding 0.5 hectares where you wish to claim a larger permitted area
• Any situation involving two or more properties where a retrospective nomination strategy may be appropriate