If you own a rental property that you once lived in as your main residence then you should qualify for Principle Private Residence (PPR) and Lettings relief on the sale of the property, the amount of relief will vary from sale to sale. Where PPR relief is available full relief is given for the years you lived in the home, as well as a final period exemption of 18 months. 

Lettings relief is then also available on any periods when the home was let, Lettings relief doesn’t cover any proportion of a chargeable gain arising when the home is empty. The 2018 Budget announced that the government will consult on changes to both PPR relief and Lettings relief from April 2020. The proposed changes are to reduce the final period exemption of PPR by half from 18 months to 9 months (there will be no changes to the 36 month final period exemption available to disabled people or those in a care home). Lettings relief will be reformed so that the relief will only be available in circumstances where the owner of the property is in shared occupancy with the tenant. 

These changes are not certain, nevertheless it may be beneficial to consider selling a rental property before April 2020 if it was once owned and lived in as your main residence to make sure that both PPR and Lettings relief are maximised on the capital disposal.

How long do I have, as a UK tax resident, to report the sale of property and pay any tax due?

Currently the sale of property by UK residents can be reported on a Self Assessment tax return. The tax return is due for submission by January 31st following the end of the tax year in which the sale took place (e.g. for the tax year ending 5th April 2018 the tax return is due for submission by 31st January 2019) with the tax payment due on the same date. 

Draft legislation has been issued to change the reporting of capital gains for UK residents and the associated Capital Gains Tax (CGT) liability on disposals of property. The main change is the requirement for UK residents to complete a return and a payment on account of CGT within 30 days following the completion date of a residential property disposal. This will apply on a worldwide basis. The new requirements will not apply where the capital gain arising on the disposal is not chargeable to CGT, for example where the gain is covered by PPR. This measure will have effect for disposals made by UK residents on or after 6th April 2020.