Selling property? Don't pay more tax than you should.
Selling property can be a significant milestone, whether you’re upgrading to a new home or freeing up funds for other projects. We understand how important it is to keep more of what you earn. That’s where capital gains tax reliefs can make a difference. These measures can reduce the tax you pay when you sell property in the 2025/26 tax year. If you’re a UK property owner looking for straightforward guidance, this blog explains the main reliefs available, how to claim them, and where to turn for support.
According to the government, around 65% of households in England own their homes. This figure highlights just how many of us may be affected by capital gains tax (CGT) at some point in our property-owning lives. We want you to focus on your next move with confidence. Read on to learn about Private Residence Relief, Lettings Relief, Business Asset Disposal Relief, and how they could help you.
Understanding capital gains tax
When you sell a property, you may pay CGT on the gain you make if it exceeds your personal annual exempt amount. For the 2025/26 tax year, the annual exempt amount for individuals is £3,000. Anything above that amount could be taxed at 18% or 28%, depending on your overall taxable income and whether your gain falls into the higher or additional rate band.
Different rules apply if you’re selling assets like shares, or if you’re classed as a non-resident. To find out more about CGT rates and thresholds, visit the official guidance on GOV.UK.
Private Residence Relief
Who qualifies?
Private Residence Relief (PRR) is designed for individuals selling a property that has been their main home. If you meet the residency requirements for the entire period you’ve owned the property, you may not pay any CGT. PRR covers the time you occupied the property as your principal residence. Even if you lived elsewhere for a while, you might still qualify for partial relief, depending on how long you stayed in the home and your reasons for moving out.
How it works
If you lived in the property as your only or main home, the portion of your gain relating to that time is exempt from CGT. For many UK homeowners, PRR often means zero capital gains tax on the sale of their main residence. However, changes in your living arrangements may affect your entitlement, so it’s always best to keep accurate records of your occupancy periods.
Lettings Relief
Why it matters
Lettings Relief was introduced to assist those who rent out a home that used to be their main residence. If you let out a property after living in it, this relief could reduce the CGT due when you sell. But some of the rules changed a few years ago, so it’s worth revisiting the requirements carefully if your property falls into this category.
Current rules
From April 2020, Lettings Relief applies only if you share occupancy with a tenant, which means you lived in the property at the same time it was rented out. If you rented your entire property to someone else after moving elsewhere, the relief is far more limited. The amount of relief you can claim depends on how long you shared the property with a tenant and other conditions set by HMRC.
How to claim capital gains tax reliefs
Keep track of dates and costs.Accurate record-keeping is the first step to claiming capital gains tax reliefs.
You’ll need:
Purchase dates and sale dates
Acquisition costs (including stamp duty and legal fees)
Selling costs (estate agent fees, solicitor costs, etc.)
Records of any significant improvements you made to the property
Declare your gains
If you do owe CGT, you must report it to HMRC.
For UK residential property, you usually need to report and pay any tax due within 60 days of completing the sale. If reliefs apply, calculate how much they reduce your taxable gain. We can help you prepare the paperwork and ensure you claim all valid allowances, so you don’t pay more than you should.
Check with a professional. Reliefs can overlap, and they sometimes have caveats. If you’re unsure how a particular relief applies to your situation, it’s wise to consult a tax specialist. Our team is here to explain which reliefs might be available and how to claim them correctly.
Example scenarios
Private Residence Relief example
Imagine that Jane bought her only home in 2015 and lived in it as her main residence until she sold it in 2025. She made a £60,000 gain. Because she occupied the property for the entire period, she qualifies for full PRR, so no CGT is due.
Lettings Relief example
Callum lived in his property for three years and then shared it with a tenant for one year before selling. Because he continued to occupy part of the property while renting out a room, Lettings Relief may apply to the portion of the gain attributed to the time he shared occupancy. This relief reduces Callum’s final taxable gain, potentially bringing it below his annual exempt amount.
Final thoughts on capital gains tax reliefs for property owners
We understand how important it is to minimise your tax bills while you focus on what really matters to you. By exploring the right capital gains tax reliefs, you can reduce the amount of tax you owe and keep more of the profits from your property sale.
If you have any questions or want tailored advice, contact us to see how we can support you. We’ll help you find solutions that fit your goals, so you can move forward with confidence.
To stay up-to-date with legislation and access specific guidance tailored to your business circumstances, speak to the team. Call on 01225 825580, email on hello@richardsonswift.co.uk or contact us using the web form.