This article sets out calculation methods, how partial occupancy and absences affect the qualifying fraction. Moved out before selling? Start with the time-based apportionment section below. Lived there throughout but let or used part of it separately? Go to the area-based apportionment section. Both apply to your property? Work through both.
How is Partial Private Residence Relief Calculated?
Partial Private Residence Relief (PRR) is calculated with a single formula:
Qualifying months ÷ total months of ownership × total gain = Exempt amount
The balance is the chargeable gain, before deducting the £3,000 annual exempt amount and applying the appropriate CGT rate.
Qualifying months include periods of actual occupation, certain allowable periods of deemed occupation, and the final 9 months of ownership, which count automatically even if the owner had already moved out by then. Deemed occupation covers situations such as working abroad or being required to live elsewhere for work, and the categories are set out in full in UKPA's guide to Private Residence Relief.
If the owner held more than one property at the same time, only the months when this particular property was their nominated or factually established main residence count toward the qualifying total.
Once the qualifying fraction is known, UKPA's PRR Calculator applies it to your own figures and returns the exempt and chargeable amounts.
Do I pay CGT if I lived in the property but then let it out?
Where a property was the owner's home for part of the ownership period and let out for the rest, the exempt fraction is based on how many of the total months were qualifying months.
For example,
A property was owned for 10 years (120 months). The owner lived in it as their main home for the first 6 years (72 months), then let it out for the remaining 4 years, before selling in 2025/26. The total gain on sale was £200,000.
Step 1 — qualifying months: 72 months of actual occupation + 9 months final period = 81 qualifying months.
Step 2 — PRR fraction: 81 ÷ 120 = 67.5%.
Step 3 — exempt gain: 67.5% × £200,000 = £135,000.
Step 4 — chargeable gain before AEA: £200,000 − £135,000 = £65,000
Step 5 — annual exempt amount: £65,000 − £3,000 = £62,000 taxable gain
CGT would then be:
£11,160 if the whole £62,000 falls within the 18% basic-rate band.
£14,880 if the whole £62,000 is taxed at 24%.
In practice, the actual tax may be a mix of both rates depending on the seller’s other taxable income.
Because the property was let out in full after the owner moved out, lettings relief does not apply under the post-6 April 2020 rules.
What if I was away from the property for part of the time, does that period still count?
The Partial Private Residence Relief calculation above assumes continuous occupation followed by continuous letting. Many owners have periods of absence in between, and these can still count as qualifying months under section 223 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992).
Three types of absence are allowable: up to 3 years for any reason, any period spent working abroad, and up to 4 years working elsewhere in the UK. In each case, the owner must return to live in the property as their main home both before and after the absence, unless their employment made that impossible.
Take the same example, but suppose the owner spent 2 of the 4 letting years working abroad and then returned to live in the property for the final year before selling. If the absence qualifies under the overseas-employment rules, those 24 months can count as qualifying months, so the calculation becomes:
- Qualifying months: 72 months occupation + 24 months overseas employment + 9 months final period = 105 months
- PRR fraction: 105 ÷ 120 = 87.5%
- Exempt gain on a £200,000 gain: £175,000
- Chargeable gain before the annual exempt amount: £25,000
- Less £3,000 annual exempt amount: £22,000 taxable gain
By contrast, if the owner worked abroad for those same 2 years but never moved back in before selling, those 24 months would not count under the normal absence rules, so the calculation reverts to:
- Qualifying months: 72 months occupation + 9 months final period = 81 months
- PRR fraction: 81 ÷ 120 = 67.5%
- Exempt gain: £135,000
- Chargeable gain before the annual exempt amount: £65,000
- Less £3,000 annual exempt amount: £62,000 taxable gain
The key point is that the overseas-employment absence can qualify, but the precise result depends on whether the statutory conditions are met.
What if I only used part of the property as my home?
A different apportionment applies where the owner lived in the property for the whole ownership period but only part of it was ever used as their home. Here the fraction is based on floor space, not time.
An owner held a three-storey house for 8 years (96 months), living there as their main home throughout. The ground floor, 35% of the total floor space, was let exclusively to tenants for the whole 8 years. The property was sold in 2025/26 for a total gain of £150,000.
Step 1 - Residential fraction
65% of the property was the owner's home throughout. Since the owner occupied that portion for the full ownership period, full PRR applies to 65% of the gain.
- PRR exempt: 65% × £150,000 = £97,500.
Step 2 - Chargeable Portion
- 35% × £150,000 = £52,500
- If no lettings relief applies, subtract the £3,000 annual exempt amount from the £52,500 chargeable gain, leaving £49,500 taxable gain.
CGT due would then be £8,910 at 18% or £11,880 at 24%, depending on the taxpayer’s other income and which rate band the gain falls into.
Because part of the property was let as residential accommodation while the owner occupied the rest as their main home, lettings relief may be available if the statutory conditions are met. The lettings relief calculation, including the £40,000 cap, is covered separately in UKPA's guide to lettings relief.
Does having a lodger affect my private residence relief?
A single lodger who lives in the owner’s home and shares the living accommodation generally does not reduce Private Residence Relief. HMRC says no part of the accommodation should be treated as having ceased to be the owner’s main residence in those circumstances.
The area-based restriction applies where part of the property is let out as a separate, exclusive area, such as a self-contained annex or other clearly defined accommodation that is not shared with the owner. In those cases, PRR may need to be apportioned and lettings relief may also need to be considered.
So the key distinction is not simply “lodger versus tenant,” but whether the arrangement is shared occupation of the home or an exclusive letting of part of it.
What if I used part of my home exclusively for my business?
If part of your home is used exclusively for a trade, business, profession or vocation, Private Residence Relief is restricted for that part only. A room used only partly for business and partly for domestic purposes will usually not reduce PRR, but a dedicated office, consulting room or workshop may do so.
I've worked out I have a chargeable gain — what do I need to report to HMRC?
If you have a chargeable gain on the disposal of a UK residential property, you must report it to HMRC within 60 days of completion and pay any CGT due within the same 60-day period. This reporting requirement applies even if you will also include the disposal on your Self-Assessment return later.
For 2025/26, CGT on residential property gains is charged at 18% and 24%, depending on how much of the gain falls within your unused basic-rate band, after deducting the annual exempt amount of £3,000.
The PRR claim itself is reported using Box 54 on the Capital Gains Tax summary pages.
Missing the 60-day deadline attracts automatic penalties, in addition to any interest on late payment. UKPA's CGT Return service manages the calculation, the PRR claim, and the HMRC submission within the deadline. UKPA's CGT Calculator can also give an early estimate of the liability before the return is prepared.
Conclusion
Partial Private Residence Relief turns on two separate tests: how long the property was the owner's home, and how much of it was used that way. Getting the qualifying fraction right, particularly where absences or shared occupation are involved, has a direct pound-for-pound effect on the final CGT bill, and that bill must be reported and paid within 60 days of completion.
Frequently Asked Questions
Periods of absence can count for PRR if they fall within the statutory categories: up to 3 years for any reason, any period of overseas employment, and up to 4 years for certain UK work-related absences. The property must also have been the individual’s only or main residence at some point before and after the absence, though not necessarily immediately before and after.
Both mechanisms can apply to the same property, for example where the owner moved out for a period and separately let part of the property throughout. Where both time-based and space-based restrictions apply, PRR must be computed by reference to the facts of the case rather than by applying a fixed sequence of fractions.
Yes, in most cases. The garden and grounds attached to a property form part of the "permitted area" under section 222(1)(b) TCGA 1992, and where the whole plot was part of the owner's residence throughout, relief is calculated on the house and garden together without a separate fraction for each. Garden and grounds may be included within the residence up to the permitted area, usually 0.5 hectare unless a larger area is justified. Grounds beyond that limit may need their own restriction, so larger gardens are worth checking individually.
Yes. Under section 16(2) TCGA 1992, private residence relief can restrict an allowable loss in the same way it restricts a gain. HMRC also notes that lettings relief, section 225 and section 226 can produce exceptions where a gain is relieved but the loss position is treated differently
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