How does Private Residence Relief work?

PRR exempts the gain attributable to the period the property was your only or main home, plus the final 9 months. Time the property was let or used for business reduces relief proportionally. Letting Relief now only applies where you shared occupancy with the tenant.

Are home improvements deductible against CGT?

Qualifying enhancement costs must be capital in nature and still reflected in the asset at disposal. A kitchen or bathroom replacement is not automatically an enhancement. Do not deduct the same cost against both rental income and the capital gain.

What happens if I miss the 60-day deadline?

Penalties: £100 immediately, more after 6 and 12 months, plus interest on unpaid CGT. Even if your final Self Assessment shows the right amount, the 60-day penalty stands. File and pay an estimate within 60 days, then reconcile on SA.

Worked Examples

Example: 60-Day CGT Report on a Residential Property

A step-by-step example of reporting and paying CGT on the sale of a UK rental property within 60 days of completion, including PRR for a period of owner occupation.

3 min read·Updated 10 November 2026

Quick answers

Do I need to report a property sale within 60 days?

Yes if the property is UK residential, you have a CGT liability after reliefs, and you're a UK resident. File via the UK Property Account on gov.uk and pay the estimated CGT within 60 days of completion. Non-residents must file regardless of whether tax is due.

Scenario

Marco Russo sold a London flat for £525,000 completing on 15 June 2025. He bought it for £280,000 in June 2014 and lived in it as his only home from June 2014 to May 2018 (47 months) before letting it out for the next 85 months. He's a higher-rate taxpayer.

Step 1: Calculate the gross gain

	£
Sale proceeds	525,000
Less estate-agent fees (2% + VAT)	(12,600)
Less solicitor on sale	(1,800)
Net proceeds	510,600
Less original purchase price	(280,000)
Less stamp duty paid in 2014	(8,400)
Less solicitor on purchase	(1,500)
Less new kitchen 2017 (assumed qualifying enhancement still reflected in the property at disposal)	(8,000)
Gain before reliefs	212,700

(Routine repairs, redecoration and broken-boiler replacements aren't capital improvements and were already deducted against rental income.)

Step 2: Period of ownership and PRR

Total ownership: June 2014 – June 2025 = 132 months
Owner-occupation period: 47 months
Plus the final 9 months of ownership are deemed PRR
Total PRR: 47 + 9 = 56 months

PRR fraction: 56 / 132 = 0.4242

PRR relief = £212,700 × 56 / 132 = £90,236.36

Step 3: Letting Relief

Letting Relief now only applies if the owner shared occupancy with the tenant. Marco didn't, so no Letting Relief.

Step 4: Chargeable gain

Gain after PRR: £212,700 – £90,236.36 = £122,463.64

Step 5: Annual exempt amount

Less AEA 2025/26 (£3,000): £119,463.64

Step 6: CGT due

Marco is a higher-rate taxpayer with no unused basic-rate band, so the entire gain falls in the upper band.

CGT @ 24% × £119,463.64 = £28,671.27

Step 7: 60-day reporting

Because it's UK residential property with CGT to pay, Marco must:

Sign in to the UK Property Account on gov.uk (Government Gateway)
Submit a CGT on UK Property return
Pay £28,671.27

All within 60 days of completion — i.e. by 14 August 2025.

Step 8: Self Assessment

The same gain must also be reported on Marco's 2025/26 SA108 (Capital Gains pages) by 31 January 2027. Tax already paid via the property return is credited against the final SA bill — and any over- or underpayment reconciled there.

Step 9: Penalties for missing the 60-day deadline

Lateness	Penalty
1 day late	£100
6 months late	additional £300 (or 5% of CGT)
12 months late	additional £300 (or 5% of CGT)

Plus interest on unpaid CGT.

Common pitfalls

Forgetting the final 9 months of deemed PRR
Confusing revenue repairs (already in rental accounts) with capital improvements (allowable against the gain)
Not deducting purchase costs (SDLT, legal, surveyor)
Ignoring the 60-day clock — penalties apply even if the SA return is on time

General guidance, not tax advice. Speak to a qualified accountant for advice tailored to your situation. Figures relate to the 2025/26 UK tax year. Source: HMRC, gov.uk.

The June 2014 purchase uses the then-applicable 3% slab SDLT on £280,000 (£8,400), assuming no relief. The example uses the stated 132 and 56 months without rounding the fraction early; an actual return must use exact dates and HMRC rounding rules.

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