Taxation (UK) · Gains and losses on the disposal of movable and immovable property

Principal Private Residence Relief (PPR) for ACCA Taxation (UK)

Updated 11 October 2026 · Fact-checked

Principal private residence (PPR) relief exempts the gain on an individual's main home. The exempt fraction is the period of occupation, plus qualifying deemed occupation, plus the final 9 months, divided by total ownership. Multiply the gain by that fraction. The rest is chargeable. Grounds are exempt up to 0.5 hectare in the usual case.

Understand Principal Private Residence Relief

A person's only or main home is usually the biggest asset they sell. UK law exempts the gain on it, so most home sales produce no capital gains tax. This is principal private residence relief, or PPR.

The relief is time-based. You work out how much of the period of ownership counts as 'occupied'. That fraction of the gain is exempt. If you lived in the house throughout, the whole gain is exempt. If you let it out or left it empty for part of the time, only part is exempt.

Some periods count as occupied even when you were away. These are deemed occupation. The final 9 months of ownership are always treated as occupied, as long as the property was your main residence at some point. Gardens and grounds are included, normally up to 0.5 hectare.

If you own two homes, you can make an election to say which is your main residence. Without an election, HMRC decides on the facts. The election is made within two years of the combination of residences beginning, and you can vary it later.

In the exam, you will see PPR in a gains computation for an individual. You calculate the gain first, then deduct the exempt part, then apply the annual exempt amount and the rates ACCA provides.

Key rules to remember

PPR exempt fraction: Exempt gain = Gain × (Occupied months + Deemed occupation months + Final 9 months) ÷ Total months of ownership; Total ownership runs from acquisition to disposal. Count the final 9 months once only, and cap it at the actual period of ownership. Deemed occupation months must meet the rules in the next formula.
Deemed occupation periods: Any reason: up to 3 years in total. Employment elsewhere in the UK: up to 4 years. Employed abroad: any length.; The property must have been your main residence before the absence. Except in the working-abroad case, you must also occupy it again afterwards. Absence that does not meet these conditions is not deemed occupation.
Chargeable gain after PPR: Chargeable gain = Gain × (Non-occupied months ÷ Total months of ownership); Non-occupied months exclude deemed occupation and the final 9 months. Equivalent to gain minus exempt part.
Final period of ownership: Last 9 months of ownership are always exempt; This applies if the property was the main residence at some time. Do not apply it to a property that was never your main residence.
Garden and grounds: Exempt area = house plus grounds up to 0.5 hectare; Larger grounds can qualify only if needed for reasonable enjoyment of the home. Otherwise the excess is not exempt.
Main residence election: Election within 2 years of the combination of residences beginning; Applies if you have two or more residences. It can be varied later by notice.
CGT rates and annual exempt amount: Lower rate 18%, higher rate 24%, annual exempt amount £3,000; Use the figures in the Tax Rates and Allowances provided by ACCA. The rate depends on the individual's taxable income: 18% applies to the gain that falls within any remaining basic rate band, and 24% to the gain above it. Apply the annual exempt amount after PPR is applied.
Business asset disposal relief rate: Rate 14% on qualifying gains, lifetime limit £1,000,000; Not part of PPR, but may appear in a related disposal.

How to solve Principal Private Residence Relief questions

Use the same sequence for every PPR question. It stops you missing a period or applying the fraction to the wrong figure.

1Compute the full gain: proceeds less costs of sale, less cost and enhancement expenditure.
2Draw a timeline from acquisition to disposal. Count total months of ownership.
3Mark the periods of actual occupation as the main residence.
4Add periods of deemed occupation if the conditions are met: up to 3 years in total for any reason, up to 4 years for employment elsewhere in the UK, and any length if employed abroad. The property must have been the main residence before the absence and, except in the abroad case, occupied afterwards.
5Add the final 9 months. Check the property was the main residence at some point.
6Work out the exempt fraction: total exempt months ÷ total months of ownership. Apply it to the gain.
7Deduct the exempt part to find the chargeable gain. Then deduct any losses and the annual exempt amount of £3,000. Tax the rest at 18% to the extent it falls within the individual's remaining basic rate band (after taxable income), and at 24% above it.
8If two homes are owned, decide which one is the main residence, using the election if given, and repeat the steps for each.

Quickest way: Non-occupied months method

When to use it: Use this when most of the ownership is exempt and only a short gap counts as non-occupied.

Compute the gain in full.
Count total months owned.
Find the non-exempt months only: total months less occupied, deemed occupation and the final 9 months.
Chargeable gain = gain × non-exempt months ÷ total months.
Then deduct the annual exempt amount and apply the rate.

Common mistakes in Principal Private Residence Relief

Forgetting the final 9 months or applying it to a property that was never the main residence.
Students remember the number but not the condition.
Fix: Check that the property was the main residence at some time. If so, always add the final 9 months.
Dividing by the wrong number of months.
Students divide by the occupied period instead of total ownership.
Fix: The denominator is always total ownership, from acquisition to disposal.
Adding the final 9 months on top of overlapping occupation, so exempt months exceed ownership.
Students count the last 9 months twice when they still lived there.
Fix: Count each month once. Exempt months can never exceed total months of ownership.
Applying the annual exempt amount before PPR.
The order is not fixed in the student's mind.
Fix: Apply PPR to the gain first. Then deduct losses and the £3,000 annual exempt amount.
Choosing the main residence by default when an election is available.
Students assume the home where the owner lives most is the only choice.
Fix: With two homes, read the facts for an election. It is usually beneficial to elect for the home with the larger gain accruing over the period, within the time limit.
Ignoring grounds above 0.5 hectare.
The size limit is easy to skim over.
Fix: Check the grounds. If larger than 0.5 hectare, only the part needed for reasonable enjoyment of the home is exempt.

Worked examples

Example 1

Ravi bought a house on 1 January 2015 and lived in it until 31 December 2019. He then moved abroad, and the house was empty until he sold it on 31 December 2024. The gain was £180,000. The house was his main residence from purchase to 31 December 2019. Calculate the chargeable gain before the annual exempt amount.

Show the solution

Total ownership is 1 January 2015 to 31 December 2024, which is 10 years, or 120 months.
Actual occupation is 1 January 2015 to 31 December 2019, which is 60 months.
The house was the main residence at some time, so the final 9 months are exempt: 9 months.
Exempt months: 60 + 9 = 69.
Non-exempt months: 120 − 69 = 51.
Chargeable gain: £180,000 × 51 ÷ 120 = £76,500.

Answer: The chargeable gain is £76,500, before the annual exempt amount of £3,000.

Example 2

Maya bought a house for £200,000 on 1 July 2016. It was her main residence for the first 4 years (48 months). She then let it for the rest of the time until sale on 30 June 2022, which is 72 months of ownership in total. The gain was £90,000. Calculate the chargeable gain and the CGT payable, assuming Maya is a higher rate taxpayer with no other gains.

Show the solution

Total ownership: 1 July 2016 to 30 June 2022 is 72 months.
Actual occupation as her main residence: 48 months. The let period is therefore 72 − 48 = 24 months.
The house was her main residence at some time, so the final 9 months are exempt. They fall within the 24 let months, so they do not overlap the occupation.
Exempt months: 48 + 9 = 57.
Non-exempt months: 72 − 57 = 15.
Chargeable gain: £90,000 × 15 ÷ 72 = £18,750.
Deduct the annual exempt amount: £18,750 − £3,000 = £15,750.
Maya is a higher rate taxpayer, so all of the gain is taxed at 24%: £15,750 × 24% = £3,780.

Answer: The chargeable gain is £18,750. After the £3,000 annual exempt amount, CGT payable is £3,780.

Exam tips

Draw a timeline first. Most marks come from correct months, not the arithmetic.
Always state the final 9 months in your answer, even if the answer is obvious. It earns a mark.
For two homes, look for an election and its time limit. Say which home you would elect for and why.
In objective test questions, check for exact months and gain before picking an option, since answers are marked all or nothing.
Show the fraction, such as 51 ÷ 120, so you pick up method marks if your final figure is wrong.

Practice questions from Gains and losses on the disposal of movable and immovable property

Principal Private Residence Relief in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

ACCA Strategic ProfessionalResidential Property, Private Residence Relief and Reporting

Principal Private Residence Relief: frequently asked questions

What is the final 9 months rule in PPR relief?

The last 9 months of ownership are treated as occupied, so the gain for that period is exempt. It applies only if the property was your main residence at some point. Each month counts only once.

Does PPR relief apply to a house that was let out?

It applies to the periods when you lived there as your main home, plus deemed occupation and the final 9 months. Let periods are not exempt unless they are treated as occupied. You then apply the fraction to the gain.

How does a main residence election work with two properties?

If you have two homes, you can elect which one is your main residence. The election is made within two years of the date the combination of residences began. You can change it later by giving notice.

How big can the garden be for PPR relief?

Grounds up to 0.5 hectare, including the house, normally qualify. Larger grounds only qualify if they are needed for reasonable enjoyment of the house.