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CG64970 | Private residence relief: computation of relief: introduction

From HM Revenue & Customs · Capital Gains Manual

The purpose of private residence relief is to exempt from tax any gain accruing from the disposal of a dwelling-house, together with its garden or grounds, to the extent that it has been used as its owner’s only or main residence. The proportion of the gain that is exempted is determined by the proportion of the period of ownership in which the property has been used as its owner’s only or main residence.

The period of ownership, for the purpose of the relief, is defined at s222(7) TCGA92 and s223(7) TCGA92. The effect of these definitions is explained at CG64920+.

The period of residence is extended by several statutory provisions. These are listed below. The effect of each of these rules is to deem a period to be a period of residence.

  • For disposals before 6 April 2014, s223(2) TCGA92 deems the final 36 months of ownership to be a period of only or main residence. For disposals on or after the 6 April 2014 but before 6 April 2020 the period is the final 18 months of ownership and for disposals on or after 6 April 2020 the period is reduced to the final 9 months of ownership, see CG64985+. However, see CG64933 and the example in CG64936 if the disposal is made on or after 10 December 2003 and the acquisition cost is reduced by a claim to gift hold-over relief on an earlier disposal.

  • For disposals on or after 6 April 2020, s223ZA TCGA92 allows certain periods before residence commences to be treated as periods of residence. For disposals prior to 6 April 2020 ESC D49 applies to give the same effect, see CG65003.

  • S223(3) TCGA92 allows certain periods of absence to be treated as periods of residence, see CG65030+.

  • S222(8) and s222(9) TCGA92 allow certain periods of absence when the owner is residing in job-related accommodation to be treated as periods of residence, see CG64555+.

  • For disposals on or after 6 April 2009 s225B TCGA92 allows the shared home to continue to be treated as a residence of a spouse or civil partner who has separated and moved out. For disposals prior to 6 April 2009 ESC D6 applies to give the same effect, see CG65356.