---
title: "Private Residence Relief (PRR): A UK Guide to CGT Exemption"
description: "Private Residence Relief (PRR) is a cornerstone of UK Capital Gains Tax (CGT) legislation, designed to exempt the gain an individual makes when they dispose of their main home. The core principle is straightforward: you should not pay tax on…"
url: "https://www.accountingfirms.co.uk/knowledge-bank/private-residence-relief-prr/"
updated: "2026-06-24"
category: "Landlord & Property Tax"
---

# Private Residence Relief (PRR): A UK Guide to CGT Exemption

Private Residence Relief (PRR) is a cornerstone of UK Capital Gains Tax (CGT) legislation, designed to exempt the gain an individual makes when they dispose of their main home. The core principle is straightforward: you should not pay tax on the increase in value of your primary residence. However, the application of the relief can become complex when a property's use changes over the period of ownership.

This guide details the essential components of PRR, from the fundamental qualifying conditions to the [calculation of relief](https://www.accountingfirms.co.uk/blog/budgeting-in-accounting/), incorporating the key changes effective from 6 April 2020.

## **What Qualifies for Private Residence Relief?**

The legislation in section 222 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992) sets out the conditions for a disposal to qualify for PRR. An individual must meet several key tests.

### **1. A Dwelling-House that is Your Main Residence**

The relief applies to a gain attributable to the disposal of a dwelling-house (or part of one) that has, at any time during the period of ownership, been your "only or [main residence"](https://www.accountingfirms.co.uk/blog/selling-your-main-residence-with-land-will-the-sdlt-return-trip-you-up/). This includes properties outside the UK if the residency conditions are met.

If you own and live in more than one property, you must determine which is your [main residence](https://www.accountingfirms.co.uk/blog/swapping-your-main-residence-for-capital-gains-tax-purposes/). You can nominate one property as your [main residence](https://www.accountingfirms.co.uk/blog/tax-and-the-main-residence/) by giving notice to HMRC within two years of the date you start having two or more residences. For married couples or [civil partners](https://www.accountingfirms.co.uk/blog/have-my-pension-fund/) living together, you can only have one main residence between you.

### **2. Garden and Grounds (The Permitted Area)**

PRR also extends to the land you have occupied and enjoyed with the residence as its garden or grounds. The relief automatically covers an area, including the site of the dwelling-house, of up to 0.5 of a hectare (approximately 1.2 acres).

You may [claim relief](https://www.accountingfirms.co.uk/blog/claim-for-overpayment-relief/) for a larger area if you can demonstrate that the larger area is required for the "reasonable enjoyment" of the dwelling-house, having regard to its size and character. HMRC may require the District Valuer to assess whether this test is met.

## **How to Calculate Private Residence Relief**

If a property has been your only or main residence throughout your entire period of ownership, you will receive full relief, and no CGT is payable. However, if the property was not your main residence for the entire period, you must calculate the portion of the gain that is exempt.

You calculate the relief using the following formula:

> Relief = (Period of qualifying use ÷ Total period of ownership) x Total Gain.

The "period of qualifying use" includes both actual occupation and certain periods of "deemed occupation".

### **The Final Period Exemption**

A crucial element of the calculation is the final period exemption. The last **9 months** of ownership always qualify for relief, regardless of whether you were living in the property during that time. This applies to disposals made on or after 6 April 2020. For disposals before this date, the final period exemption was 18 months.

This 9-month rule provides a practical window for individuals to sell their former home after moving into a new one without losing relief for that period. A longer 36-month period remains available for individuals who are disabled or moving into a care home.

## **Deemed Periods of Occupation**

Section 223(3) TCGA 1992 allows certain periods of absence to be treated as periods of actual occupation, provided the property was your main residence at some point *before* and *after* the absence.

You can treat the following periods as a qualifying occupation:

- **Any Absence up to 3 Years:** Periods of absence for any reason, up to a cumulative total of three years.
- **Overseas Employment:** Any period of absence where you worked in employment with all duties performed outside the UK.
- **UK Employment:** Periods of absence up to a cumulative total of four years, where your work required you to live elsewhere.

If you cannot return to the property after a period of absence due to your work conditions, the requirement for the property to be your main residence *after* the absence is waived.

## **Common Restrictions and Apportionments**

Full PRR is not always available. You must apportion the gain where parts of the property or periods of ownership do not qualify.

### **Business Use**

If you have used part of your home exclusively for business purposes, the part of the gain relating to that area does not qualify for PRR. An apportionment of the gain is necessary. Incidental or occasional business use, such as [working from a home](https://www.accountingfirms.co.uk/knowledge-bank/use-of-home-as-office/) office that is also used for personal activities, does not typically require an apportionment.

### **Letting Relief**

If you let out all or part of your home, the gain attributable to the let period will not qualify for PRR. However, you may be able to claim a separate relief known as Lettings Relief. For disposals from 6 April 2020, Lettings [Relief is only available](https://www.accountingfirms.co.uk/knowledge-bank/are-there-tax-reliefs-available-for-replacing-domestic-items-in-rental-properties/) if you were in shared occupancy with your tenant.

## **Summary of Key PRR Rules**

| Feature | Rule | Source |
| --- | --- | --- |
| **Primary Condition** | Property must have been the owner's only or main residence. | s.222(1) TCGA 1992. |
| **Permitted Area** | Includes garden/grounds up to 0.5 hectares automatically. | s.222(2) TCGA 1992. |
| **Final Period Exemption** | The final 9 months of ownership always qualify for relief. | s.223(1) TCGA 1992. |
| **Periods of Absence** | Specific periods of absence (e.g., up to 3 years for any reason) can be treated as deemed occupation. | s.223(3) TCGA 1992. |
| **Nominations** | An individual with two or more homes can nominate one as their main residence within two years. | s.222(5) TCGA 1992. |
| **Spouses/Civil Partners** | Can only have one main residence between them. | s.222(6) TCGA 1992. |

 

*For detailed technical guidance, including specific examples of apportionments and the interaction

## References

1. [Taxation of Chargeable Gains Act 1992, s 222](https://www.legislation.gov.uk/ukpga/1992/12/section/222)
2. [Capital Gains Manual - CG64200 - Private residence relief: introduction: scheme of relief at 1](https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64200#:~:text=arising%20on%20the%20disposal%20of,%20Next%20page&text=arising%20on%20the%20disposal%20of,permitted%20area%20of&text=a%20person's%20home,%20Next%20page&text=a%20person's%20home,permitted%20area%20of)
3. [Capital Gains Manual - CG65114 - Private residence relief: example: sale of dwelling-house: land exceeds permitted area at 1](https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65114#:~:text=residence%20within%20the%20time%20allowed,%20Previous%20page%20Next%20page&text=residence%20within%20the%20time%20allowed,the%20annual%20exempt&text=(see%20CG64495),%20Previous%20page%20Next%20page&text=(see%20CG64495),the%20annual%20exempt)
4. [Capital Gains Manual - CG64860 - Private residence relief: permitted area: Valuation Office Agency (VOA) at 1](https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64860#:~:text=you%20should%2C%20Advise%20the%20taxpayer,there%20has%20been%20a%20sale&text=you%20should%2C%20Advise%20the%20taxpayer,%20If&text=that%20you%20have,there%20has%20been%20a%20sale&text=that%20you%20have,%20If)
5. [Taxation of Chargeable Gains Act 1992, s 223](https://www.legislation.gov.uk/ukpga/1992/12/section/223)
6. [Capital Gains Manual - CG64977 - Private residence relief: computation of relief: general rule at 1](https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64977#:~:text=Capital%20Gains%20Manual%20CG64977%20%2D,%20Previous%20page%20Next%20page&text=Capital%20Gains%20Manual%20CG64977%20%2D,the%20annual%20exempt&text=Private%20residence%20relief,%20Previous%20page%20Next%20page&text=Private%20residence%20relief,the%20annual%20exempt)
7. [Changes to ancillary reliefs in Capital Gains Tax Private Residence Relief at 4](https://www.gov.uk/government/publications/changes-to-ancillary-reliefs-in-capital-gains-tax-private-residence-relief/changes-to-ancillary-reliefs-in-capital-gains-tax-private-residence-relief#:~:text=ESC%20D21%2C%20for%20late%20claims,pay%20for%20accommodation%20legislate%202&text=ESC%20D21%2C%20for%20late%20claims,those%20funds%20to&text=in%20dual%20residence,pay%20for%20accommodation%20legislate%202&text=in%20dual%20residence,those%20funds%20to)
8. [Changes to ancillary reliefs in Capital Gains Tax Private Residence Relief at 2](https://www.gov.uk/government/publications/changes-to-ancillary-reliefs-in-capital-gains-tax-private-residence-relief/changes-to-ancillary-reliefs-in-capital-gains-tax-private-residence-relief#:~:text=from%20the%20copyright%20holders%20concerned,changes%20were%20announced%20at%20Budget&text=from%20the%20copyright%20holders%20concerned,the%20measure%20These&text=This%20publication%20is,changes%20were%20announced%20at%20Budget&text=This%20publication%20is,the%20measure%20These)
9. [Changes to ancillary reliefs in Capital Gains Tax Private Residence Relief at 5](https://www.gov.uk/government/publications/changes-to-ancillary-reliefs-in-capital-gains-tax-private-residence-relief/changes-to-ancillary-reliefs-in-capital-gains-tax-private-residence-relief#:~:text=Legislation%20will%20be%20introduced%20in,1%20of%20Budget%202018%20as&text=Legislation%20will%20be%20introduced%20in,out%20in%20Table&text=Finance%20Bill%202019%2D20,1%20of%20Budget%202018%20as&text=Finance%20Bill%202019%2D20,out%20in%20Table)
10. [Changes to ancillary reliefs in Capital Gains Tax Private Residence Relief at 6](https://www.gov.uk/government/publications/changes-to-ancillary-reliefs-in-capital-gains-tax-private-residence-relief/changes-to-ancillary-reliefs-in-capital-gains-tax-private-residence-relief#:~:text=cases%20the%20measure%20will%20reduce,receiving%20spouse%20will%20inherit%20the&text=cases%20the%20measure%20will%20reduce,ensure%20that%20the&text=the%20period%20of,receiving%20spouse%20will%20inherit%20the&text=the%20period%20of,ensure%20that%20the)
11. [Capital Gains Manual - CG64650P - Capital Gains Manual: Reliefs: Private residence relief: Non-residential use and letting: Contents at 1](https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64650p#:~:text=Capital%20Gains%20Manual%20CG64650P%20%2D,%20restricted%20relief%20on%20part&text=Capital%20Gains%20Manual%20CG64650P%20%2D,Private%20residence%20relief&text=Capital%20Gains%20Manual,%20restricted%20relief%20on%20part&text=Capital%20Gains%20Manual,Private%20residence%20relief)
12. [Taxation of Chargeable Gains Act 1992, s 223B](https://www.legislation.gov.uk/ukpga/1992/12/section/223B)