How does Principal Private Residence Relief (PPR) work for CGT?

Principal Private Residence Relief (PPR) is one of the most valuable tax reliefs available in the UK. It exempts all or part of the gain on your main home from Capital Gains Tax when you sell it.

When does full PPR apply?

You get full relief (no CGT to pay) if the property has been your only or main home for the entire period you owned it. You must have:

• Lived in it as your main home throughout your ownership.
• Not used any part of it exclusively for business.
• The grounds (garden) must not exceed 0.5 hectares (about 1.24 acres), unless a larger area is required for the reasonable enjoyment of the property.

Partial PPR:

If the property was not your main home for the entire time you owned it, PPR is given proportionally. However, the last 9 months of ownership always qualify for relief, even if you were not living there. This gives you a grace period when moving between homes.

Letting relief:

If you let out all or part of your home that qualified for PPR at some point, you may also get Letting Relief. This is now limited to situations where you shared occupation with a tenant. The maximum Letting Relief is the lowest of: the PPR amount, £40,000, or the gain from letting.

Nominating your main home:

If you own more than one property, you can nominate which one is your main home for PPR purposes. You must make this election within 2 years of acquiring the second property. This nomination can be changed, and some people use strategic nominations to optimise their CGT position.

Important: PPR is given automatically when you sell your only home. You do not need to claim it or report the sale to HMRC, provided the gain is fully covered by the relief.