Selling a former home after moving out: the final nine months, and what survived the 2020 changes
Private residence relief still exempts the last nine months of owning a former home, but only nine, and since April 2020 lettings relief helps only an owner who lived alongside the tenant. Here is how the fraction works, a worked example comparing the old and new rules, the reliefs that survived, and the questions to settle before you put a former home on the market.
The rule, in one sentence
Under section 223 of the Taxation of Chargeable Gains Act 1992, the gain on a dwelling that has at some time been your only or main residence is exempt in the proportion that your period of residence bears to your whole period of ownership, and the last nine months of ownership count as residence in any event, whether or not you lived there then. The final period was 36 months until April 2014 and 18 months until April 2020. For disposals on or after 6 April 2020 it is nine.
What the nine months is for, and what it is not
The final period exists to cover the overlap when an owner has moved and the old home is on the market. It does not stretch to fit a slow sale. Every month beyond the last nine in which you were not living there is chargeable, unless one of the absence rules covers it, and the absence rule most people remember, three years away for any reason, does not help an owner who never returns, because it requires residence both before and after the absence. Nor does the final period help with a property that was never your home. It applies only where the dwelling was your only or main residence at some point. One further detail affects the arithmetic: for capital gains tax the date of disposal is the date contracts are exchanged, not the date of completion, so the months are counted to exchange.
A worked example, old rules against new
The figures are illustrative. An owner bought a house on 1 July 2012, lived in it until 30 June 2020, then moved out and let the whole of it. Contracts for the sale were exchanged on 30 June 2026. The period of ownership is 168 months, of which 96 were spent living there. The gain, after the costs of buying, selling and improvement, is GBP 240,000. Under the current rules the exempt months are the 96 of residence plus the final nine, which fall within the letting period and so are not counted twice, making 105. The exempt fraction is 105 out of 168, so GBP 150,000 of the gain is exempt and GBP 90,000 is chargeable. No lettings relief is available because the owner did not live there while it was let. After the GBP 3,000 annual exempt amount, GBP 87,000 taxed at 24 per cent gives GBP 20,880. Under the rules before April 2020, an 18 month final period would have exempted 114 months, about GBP 162,860, and lettings relief of up to GBP 40,000 would have brought the chargeable gain down to about GBP 37,100 before the annual exempt amount. The same sale, made under the current rules, has more than twice the chargeable gain.
Lettings relief survives, but only for sharing
Since 6 April 2020, lettings relief has been available only where part of the home was let while the owner lived in another part of it, in shared occupancy with the tenant. Where it applies, it is the lowest of three figures: the private residence relief already due, GBP 40,000, and the gain attributable to the letting. An owner who let out a self-contained floor while living on the others may still benefit. An owner who moved out and let the whole house, which was the common case, does not.
Four things that did survive
First, a longer final period remains for some owners. Under section 225E, the final 36 months count where the owner, or their spouse or civil partner, is a disabled person or a long-term resident of a care home, provided they have no other residence to which relief could apply. Second, a delay in moving in. Section 223ZA, which put a former concession into the Act from April 2020, treats the house as your residence from the date you acquired it if you moved in within the first 24 months, nobody else lived there in the meantime, and the delay was due to building, renovation, redecoration or alteration, or to selling your previous home. Third, transfers between spouses and civil partners living together. For transfers on or after 6 April 2020, section 222(7) treats the recipient's period of ownership as beginning when the other's did, and counts the periods in which the house was the other's only or main residence. The earlier condition, that the house had to be the couple's home at the time of the transfer, applies only to transfers made before that date. Fourth, the absence rules for periods away that are followed by a return, which are a subject of their own.
Reporting, even when most of the gain is exempt
Where any capital gains tax is due on the sale of a UK residential property, it must be reported on a UK property return and paid within 60 days of completion, not left to the self assessment return. Where the gain is fully covered by private residence relief, there is nothing to report under that rule. Where only part is covered, as in the example, the return and payment are due within the 60 days. The rates on residential property for 2026/27 are 18 per cent within the basic rate band and 24 per cent above it.
Before a former home goes on the market
Gather the evidence of the dates you lived there, since the fraction depends on them: council tax bills, the electoral roll, utility accounts and your correspondence address. Work out the month in which the nine months will run out, and plan the timing of exchange with that date in view. If you have more than one residence, check whether a main residence nomination was made, or can still be made, within two years of the combination of residences arising. If a spouse or civil partner has an unused annual exempt amount or basic rate band, ask whether a transfer between you before the sale would reduce the bill, now that the recipient takes over the ownership history. And if part of the house was let while you lived there, make sure lettings relief is claimed. The final nine months is a fixed period. What you do in relation to it is not.
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This article is general information only and does not constitute tax advice. Figures and dates are current as at the date of writing; any worked example is illustrative. Always consult a qualified adviser before acting.