Once you move out and let your former home, the rent is property income taxed in the normal way, and the gain on a later sale is only partly covered by private residence relief. You keep relief for the years you lived there and the last 9 months of ownership, and sometimes for periods of absence, but since 6 April 2020 lettings relief is available only if you lived in the property at the same time as your tenants.

How is the rent taxed?

Letting your former home starts a property business, usually from the date of the first letting (PIM2505); the general rules are in how rental income is taxed. If you already let other property personally, the new letting simply becomes part of the same business. You are taxed on rental profit after allowable expenses, and the first £1,000 of gross property income is covered by the property allowance if you choose it instead of claiming expenses; see property income allowance. GOV.UK says you must report rental income on a Self Assessment return if it is more than £2,500 after allowable expenses or £10,000 before them, and if you do not usually file a return you must register by 5 October after the tax year in which you had rental income.

Rent a room relief does not help once you have moved out: the scheme is for resident landlords letting furnished accommodation in their own home, with a threshold of £7,500 a year (rent a room relief).

The government has announced separate rates of income tax for property income from April 2027: 22% basic, 42% higher and 47% additional, with finance cost relief given at 22%. For 2026 to 2027 property income is taxed at the ordinary income tax rates.

What expenses can I claim on my old home?

The normal rules apply: costs must be wholly and exclusively for the letting and not capital. Pre letting costs within seven years before the first letting can be relieved if they would have been allowable after letting began, but HMRC’s guidance gives the example that rent on your own home before you let it is not relieved, because it was paid to provide you with a home (PIM2505).

Mortgage interest is not deducted from rental profit by an individual. Interest and finance costs on a loan for the property instead give a tax reduction at the basic rate under sections 272A and 274A of the Income Tax (Trading and Other Income) Act 2005 (PIM2054). More detail is in landlord mortgage interest relief.

Furniture that was already in the house when you started letting cannot be claimed, but replacing it later can qualify for replacement of domestic items relief (PIM3210). Capital allowances are not available for furnishings in a let dwelling; see capital allowances for landlords.

How much private residence relief will I get when I sell?

Private residence relief exempts the proportion of the gain that relates to periods when the property was your only or main residence. HMRC’s helpsheet HS283 explains that the gain is multiplied by the period of occupation, plus the final 9 months, divided by the total period of ownership. You do not obtain a valuation at the date you moved out; the gain is simply time apportioned.

The final 9 months of ownership always qualify, whatever the property was used for, provided it was your only or main residence at some point. This becomes 36 months if you are disabled or in long term residential care and have no other relevant right in a private residence (HS283).

Do periods of absence count as living there?

Some absences are treated as periods of residence, but only if the property was your only or main residence both before and after the absence (HS283, and section 223 of the Taxation of Chargeable Gains Act 1992). The qualifying absences are:

  • absences for any reason totalling not more than 3 years;
  • any period during which you are employed with all your duties carried on outside the UK;
  • absences totalling not more than 4 years when the distance from your work prevents you living at home or your employer requires you to work elsewhere.

For the two employment absences, the requirement to return is treated as met if your job prevents you from moving back afterwards, and they also apply to a spouse’s or civil partner’s employment. If you have another home eligible for relief during the absence, you need a valid main residence nomination in favour of the former home, made within 2 years of the change in your combination of residences (HS283).

The practical point is that most people who let their former home never move back. In that case the 3 year absence relief is not available, because there is no occupation after the absence, and only the final 9 months is added to the years you actually lived there.

Can I claim lettings relief?

Only in limited cases. For disposals on or after 6 April 2020, lettings relief under section 223B TCGA 1992 applies only where part of the property was let as residential accommodation while another part was your only or main residence. It is not available for any period when the whole property was let (CG64710). The relief is the lowest of the private residence relief given, £40,000, and the gain arising because of the letting. GOV.UK also confirms that having a lodger who shares living space with you is not treated as letting out your home for this purpose.

So if you moved out and let the whole house, lettings relief is not due, however long you lived there first.

What does this look like in practice?

Illustration only. Alex bought a house in June 2014 and lived in it until June 2020. Alex then moved in with a partner and let the whole house until selling it in June 2026, with a gain of £120,000 after allowable costs.

Step Figure
Period of ownership 144 months
Months lived there 72 months
Final period 9 months
Relief fraction 81 / 144
Private residence relief £67,500
Chargeable gain £52,500
Less annual exempt amount 2026 to 2027 £3,000
Taxable gain £49,500

The absence after June 2020 does not qualify under the 3 year rule because Alex never lived there again, and no lettings relief is due because the whole house was let. The taxable gain is charged at 18% to the extent it falls within Alex’s unused basic rate band and 24% above that for 2026 to 2027.

What must I report, and by when?

Where Capital Gains Tax is due on the sale of UK residential property, a UK resident must report and pay it within 60 days of completion, using a Capital Gains Tax on UK property account, and also include the sale on a Self Assessment return if registered. Interest and penalties can apply if you miss the deadline. See the 60 day property return. In the Self Assessment computation, HS283 says to state that private residence relief is claimed and the amount, and to enter the code PRR, or LET where lettings relief applies.

What mistakes do people make?

  • Assuming the house stays fully exempt because it was once their home.
  • Claiming the 3 year absence relief without ever moving back.
  • Claiming lettings relief for a period when the whole property was let.
  • Deducting full mortgage interest from rent instead of taking the basic rate tax reduction.
  • Missing the 60 day deadline because no tax was due on the rent while it was let.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.