Chartered Accountants and Professional Business Advisers

You’re exempt from capital gains tax on the sale of your only or main home. But if you have more than one residence – and this can include a property that you use but don’t own – action is needed to ensure you aren’t hit with an unexpected and substantial tax bill.

There is no capital gains tax (CGT) chargeable on a gain realised on the sale (disposal) of a property that has been your only or main home throughout the period of ownership. This is as long as the property, together with its garden, does not exceed half a hectare – or a greater area if “required for the reasonable enjoyment of the dwelling-house as a residence, having regard to its size and character”.

Married couples and those in a civil partnership (if not separated) must have the same main residence.


A dwelling in the UK does not qualify for main residence exemption for a tax year for a non-resident (non-residents are now subject to CGT on gains since 5 April 2015 on disposal of UK residential property) unless they occupy a dwelling house in the UK for at least 90 days in the tax year. A similar rule applies to UK residents in connection with a property overseas.


If you have more than one residence you can elect which is your main residence within two years of acquiring your additional home. Otherwise, HMRC will treat it as a matter of fact and deem your main residence to be where you spend most of your time. For example, if you live in a rented flat during the week, it would be important to elect that your weekend cottage (that you own) is treated as your main residence. You can subsequently change your election, with up to two years’ retrospective effect. This is known as ‘flipping’, made infamous by a number of MPs.

Exemption periods

The exempt gain is related to the length of time your property is occupied as your main residence, but always includes the last 18 months regardless of actual occupation, compared with the total length of ownership after 31 March 1982 (or 5 April 2015 in the case of a non-resident).

If there’s a delay before you use the property as your only or main residence, that initial period is counted as a period of occupation, normally for up to a year but in certain circumstances up to a maximum of two years. With some exceptions, if you live elsewhere for a period in ‘job related’ living accommodation, this will also count as a period of occupation.

The final 18 months is increased to 36 months if the property is disposed of by someone who is (or whose spouse or civil partner is) a disabled person or long-term resident in a care home.

The exempt period of occupation is also increased if you have worked overseas, subject to certain constraints, and provided the property was your main residence before leaving the UK and, in most cases, that you resume living there on your return.

Furthermore, there is an additional exemption to cover periods you have let the property, of up to the lower of the main residence exemption and £40,000.

Careful planning can maximise the value of the exemption and significantly reduce or eliminate what can otherwise be substantial tax liabilities, now that the usual capital gains tax rate on gains on disposal of residential property is 28%.

Specific advice should be obtained before taking action, or refraining from taking action, in relation to the above.