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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Private residence relief: computation of relief: introduction

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 owners 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 owners only or main residence.

The period of ownership, for the purpose of the relief, is defined at TCGA92/S222 (7) and TCGA92/S223 (7). The effect of these definitions is explained at CG64920+.

The period of residence is extended by several statutory provisions. These are listed below and explained in the following paragraphs. The effect of each of these rules is to deem a period to be a period of residence.

  • For disposals before 6 April 2014, Section 223(2) 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 the period is normally reduced to the final 18 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.
  • ESC/D49 allows certain periods before residence commences to be treated as periods of residence, see CG65003.
  • Section 223(3) allows certain periods of absence to be treated as periods of residence, see CG65030+.
  • Section 222(8) and (9) 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 Section 225B allows the marital home to continue to be treated as a residence of a husband or wife who has separated from their spouse and moved out. For disposals prior to 6 April 2009 ESC/D6 applies to give the same effect, see CG65356.