1. Introduction: A Timely Opportunity for Landlords
As many UK landlords look to exit the buy-to-let market in the face of regulatory shifts, rising costs and fiscal pressures, the sale of a rental property in 2025 presents both risk and reward. One major risk is the looming liability for Capital Gains Tax (CGT) upon disposal of a residential investment property. However, with careful planning and timing, the relief commonly known as Principal Private Residence Relief (PPRR) or more broadly Private Residence Relief (PRR) may be deployed to reduce — or in some cases eliminate — that CGT charge.
For a landlord contemplating a sale in 2025, the potential to save £28,000 (or more) is real — provided that the property qualifies (or can qualify) for main residence relief for part of the ownership period. This article walks through how PPRR works, when it applies, how it can be used in the buy-to-let context, and how to structure a 2025 sale so that the relief is maximised, step by step.
2. Understanding PPRR / PRR: The Core Principles
2.1 What is Private Residence Relief?
PRR is a relief from CGT that exempts from tax all or part of a gain realised on the disposal of a “dwelling house” that is, or has been, the individual’s only or main residence for the period of ownership. bdo.co.uk+1
In effect, if the property in question has been the taxpayer’s home (not simply an investment) for the whole period of ownership, then the entire gain may be CGT-free. PMA Accountants+1
2.2 Key qualifying conditions
In order to claim full relief, the following conditions generally must be met: ■ the property must be a “dwelling house” (i.e., a home, flat, houseboat, etc). bdo.co.uk+1
■ it must have been the individual’s only or main residence (not just a holiday let or purely investment property). PMA Accountants+1
■ the garden or grounds must fall within the permitted area (often up to 0.5 hectare) unless specially justified. agmead.co.uk+1
■ no part of the property has been used exclusively for business (unless a portion is apportioned). litrg.org.uk
■ the relief must be claimed, if necessary, within the required timeframe and reported appropriately. GOV.UK
2.3 Partial relief and the nine-month rule
Where the property has not been the main residence for the entire period of ownership, the gain can be apportioned: the relief applies for the time the property was the main residence plus a further nine months deemed occupation at the end of ownership, even if the owner did not live there in those final nine months. Dixcart UK
This deemed period is a valuable concession, as it extends the relief even if the taxpayer moves out before sale.
3. Why This Matters for Buy-to-Let Sales in 2025
3.1 Investment properties typically attract CGT
A standard buy-to-let (B-to-L) property, if sold for a gain, is subject to CGT at higher residential property rates (currently 18% for basic-rate taxpayers and 24% for higher-rate taxpayers for the 2024/25 year) once the annual exempt amount is applied. Tax Adviser
3.2 But relief may still apply if part of the property was the owner’s home
Landlords who once lived in the property (or move in prior to sale) may convert an investment into one that qualifies for PPRR, thereby reducing the chargeable gain. Especially for sales in 2025, timing the move to residence ahead of disposal may unlock significant savings.
3.3 The headline figure: up to £28,000 saving?
Here’s how that figure can emerge: Suppose a landlord realises a gain of £140,000 on the sale of a property held for many years. If the property qualifies for full residence relief, that £140,000 gain could be entirely exempt. If only part qualifies, the relief might still shelter tens of thousands of pounds of gain. If instead no relief applies, at 20% CGT (for example) the liability could be £28,000 (20% of £140,000). Thus, securing relief avoids that level of tax.
4. Step-by-Step: How to Plan for Using PPRR on a Buy-to-Let
Step 1: Identify whether the property qualifies or can qualify as a main residence
Does the landlord live in the property? If not, could they move into it for a period ahead of sale? The property must be the owner’s only or main residence. Multiple properties? An election may be required within two years of acquiring or changing the number of residences. Saffery
Step 2: Ensure genuine residence – occupation counts
The taxpayer must actually occupy the property. Short visits alone won’t suffice: there needs to be permanence, continuity, and expectation of residence. bdo.co.uk
Step 3: Consider the timing of ownership and occupation
Because relief is apportioned, the longer the period of actual residence (plus the final nine months), the greater the relief. Conversely, extended periods of letting will reduce the relief.
Step 4: Move in ahead of sale where feasible
A landlord may move into the property as their home prior to disposal, converting it from pure rental into residence plus rental history, thereby enabling some relief. This must be genuine — not a pretence.
Step 5: Work the numbers on the gain and relief
Calculate the total gain: disposal proceeds minus acquisition cost minus allowable costs (improvements, legal fees, etc). Apportion the gain based on residence period + deemed nine months vs total ownership period to identify exempt portion.
Step 6: Claim the relief and report disposal
When filing the Self Assessment tax return, the relief must be claimed. For UK residential property disposals, the CGT must also be reported within 60 days of completion. community.hmrc.gov.uk
Step 7: Ensure professional support
Because the rules are complex (and mis-application can attract HMRC scrutiny), the assistance of a specialist adviser is highly recommended. Many landlords turn for help to services such as My Tax Accountant
5. Example Scenario: Avoiding £28,000 CGT
Consider Mr X, an individual landlord, who purchased a property in 2005 for £200,000. Over the years he let it as a buy-to-let. In January 2025 he sells the property for £400,000, realising a gain (after costs and allowances) of £140,000. He is a higher-rate taxpayer and so faces a CGT rate of 24% on gains from residential property above the annual exemption of £3,000 (2024/25). Tax Adviser
Scenario A: No residence relief
If no part of the property qualifies for PPRR, Mr X pays CGT at 24% of approximately £137,000 (after the annual exemption) → tax of roughly £32,880.
Scenario B: Moves into property and qualifies for two years’ residence before sale
If Mr X moves into the property for the two years immediately prior to sale, and those two years plus the final nine months qualify for PPRR (so 2 yrs + 0.75 yrs = 2.75 yrs of residence in, say, 20 years of ownership) → relief proportion = 2.75 / 20 = 13.75%. So £140,000 × (13.75%) = £19,250 of gain exempt; chargeable gain = £120,750; CGT at 24% = ~£28,980. Compared to no relief, this saves approximately £3,900 in tax.
Scenario C: Lives in property for longer period or originally owner-occupied
If Mr X originally lived in the property as his main home for many years, say 10 years + final nine months, then relief proportion = (10.75 yrs) / (20 yrs) = 53.75%. Exempt gain = £140k × 53.75% ≈ £75,250. Chargeable gain ≈ £64,750; CGT at 24% ≈ £15,540 — saving ~£17,340 compared to no relief.
While the headline “£28,000 saving” may apply in some models (for lower gain or basic-rate taxpayer), the message is clear: the more residence-eligible time, the greater the tax saving.
6. Special Considerations and Traps for Landlords
6.1 Lettings relief is significantly restricted
As of April 2020 the ancillary relief known as “lettings relief” is only available if the owner lives in the property at the same time as a tenant (shared occupancy) and not simply because it was let in the past. GOV.UK+1
A pure buy-to-let period is unlikely to qualify for the old lettings relief rules.
6.2 Multiple properties and election of main residence
If the landlord owns more than one property, only one can be nominated as the main residence for PRR. That election must be made (often within two years of changes). Failure to nominate correctly may result in lost relief. Saffery
6.3 Timing and intention matter
HMRC considers the individual’s actual residence and intention. Simply moving in a week before sale may not suffice to establish genuine occupation.
6.4 Business use and permitted area
If a part of the property was used exclusively for business (such as a workshop or lettable units), that portion will not qualify for relief. The permitted grounds (garden/grounds) also must meet the test of “reasonable enjoyment”. agmead.co.uk
6.5 Overseas residence and non-UK residents
For individuals living abroad or holding overseas property, the rules for PPR/PRR may differ, and time spent abroad may affect qualification. Professional advice is essential. cigmaaccounting.co.uk
6.6 Reporting deadlines
CGT disposal of UK residential property must be reported within 60 days of completion. Failure to meet the deadline may result in penalties and interest. community.hmrc.gov.uk
7. Why Timing a Sale in 2025 Makes Sense
7.1 Current CGT rates and thresholds
The current residential CGT rates (18%/24%) along with the annual exemption (e.g., £3,000 for 2024/25) make the 2025 tax year a critical one to plan ahead of possible future changes (such as increased rates or reduced exemptions). The Times
7.2 Landlord market pressures
Landlords are under regulatory, cost- and rate-pressures (for example, rising interest, tax changes on finance costs, energy compliance). Many are selling now — which means the timing of sale and tax planning is doubly important. Financial Times
7.3 Move-in strategy ahead of disposal
By moving into the property and making it the main residence for a period ahead of sale in 2025, a landlord may maximise PPRR, thereby reducing the CGT. While not always practical, for some portfolios this can deliver meaningful savings.
8. Practical Checklist for 2025 Sell-Outs
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✅ Review the buy-to-let property: rental history, financing, ownership period, current market value.
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✅ Assess the owner’s residence use: has the landlord ever lived in the property? If not, can they move in and occupy genuinely?
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✅ Monitor ownership period and calculate potential relief proportion: ownership years; residence years; plus nine months deemed.
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✅ Document all occupation evidence: utility bills, Council Tax records, addressed mail, tenancy end dates etc.
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✅ Check that no part of property was used exclusively for business or that permitted area is within limits.
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✅ Calculate the expected gain: sale price minus acquisition cost minus allowable enhancement and acquisition/disposal costs.
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✅ Apportion the gain and calculate chargeable portion; apply annual exemption; apply the appropriate CGT rate (basic or higher).
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✅ Consider whether a move to residence ahead of sale is feasible (bearing in mind the genuine occupation test).
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✅ Ensure the disposal is reported within the 60-day window and the Self Assessment return is filed correctly.
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✅ Seek specialist tax advice from a qualified adviser experienced in property tax matters.
9. When to Speak to a Specialist
This is not “do-it-yourself” territory. Especially when the gain is large, the ownership long, or the occupancy history nuanced, landlords should turn to an experienced adviser. Whether it’s reconciling rental periods, establishing residence, apportioning gains or completing the CGT forms, the input of a specialist could make the difference between paying tens of thousands of pounds more tax — or significantly reducing the bill.
If you’re a landlord selling in 2025, it’s wise to consult the team at My Tax Accountant for bespoke advice tailored to your position.
10. Conclusion: Seize the 2025 Opportunity
For UK landlords contemplating the sale of a buy-to-let investment in 2025, the potential to save substantial CGT — in some cases approaching or exceeding £28,000 — by making use of Principal Private Residence Relief is tangible. While many landlords assume PPRR cannot apply to a let property, with smart planning (such as becoming resident ahead of sale, calculating proportions correctly, and complying with the rules) it may indeed deliver meaningful relief.
However — the rules are complex, the stakes high, and HMRC scrutiny increasing. It is far better to plan ahead, gather the evidence, take professional advice, and act deliberately, than to run the risk of paying more than necessary.
In short: don’t simply sell and hope for the best — plan the steps now, claim the relief if you can, and make 2025 the year you extract your value from the property with tax-efficient precision.
