Private Letting
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I have been told that there is a special form of relief against CGT if you sell a property that is let out in which you lived prior to letting. This is supposed to be in addition to the principal private residence relief. Is there such a relief and how does it work?
Yes there is a relief and it is known as the Private Letting Relief
The Inland Revenue states that the private letting relief can be used where
· you sell a dwelling house which is, or has been, your only or main residence, and
· part or all of it has at some time in your period of ownership been let as a residential accommodation.
The amount of private letting relief that can be claimed cannot be greater than £40,000, and it must be the lowest of the following three values:
· the amount of private residence relief that has already been claimed;
· the amount of any chargeable gain that is made due to the letting; that is, this is the amount that is attributed to the increase in the property value during the period it was let.
The use of this relief is best illustrated via the following case study.
Roger buys a three-bedroom semi-detached house in North Wales for £50,000 in 1990.
He lives in the house for two years and then decides to move to a bigger four-bedroom detached house. He rents out the three-bedroom house for the next five years.
In 1997 he sells the three-bedroom house for £120,000. This means that he has made a capital gain of £70,000.
5/7ths of the profit is exempt from CGT because he is able to claim partial residence relief (two years PPR and the 36-month rule).
This means that he is only liable to pay CGT on the remaining £20,000 of chargeable gain. However, Roger is also able to claim private letting relief, and the amount he can claim is the lower of the following three values:
· amount of private residence relief already claimed is £50,000;
· amount of any chargeable gain that is made due to the letting is £20,000 (assuming that property increased by £10,000 in each of the two years that the property was let).
This means that Roger is allowed to claim private letting relief of £20,000 as this is the lower of the three values.
Therefore the outstanding chargeable gain of £20,000 is cancelled out by this relief, which means that he has absolutely no CGT liability.
In other words, Roger has made a tax-free capital gain of £70,000 just by having lived in a property for two years!
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Protection for landlords privately letting up to 3 properties 1 .
Unlimited *rebuild or repair costs for properties with 5 bedrooms or fewer
*subject to eligibility criteria
Unlimited costs for damage to the structure of your property including its permanent fixtures, outbuildings, boundary walls, drives, paths, gates and pools
Up to £10,000 for undamaged items that form part of a set, suite or pair if one item is damaged and can’t be repaired or replaced with a matching item
Up to £100,000 for loss of rent if your tenants are unable to live in the property due to an event covered under this policy
Alternative accommodation for tenants up to £10,000 if your tenants are unable to live in the property due to an event covered under this policy
Up to £2 million to cover the cost of a claim made against you for injury or damage that happens on your property
Protection against malicious damage to your property caused by your tenants up to a value of £5,000
We’ll cover the cost of replacement locks if your keys are lost or stolen, keeping your property secure – up to £1,000
Cover for those annoying mishaps caused by you or your tenants such as putting a foot through the ceiling, reversing a car into the garage door, smashing a window with an errant stone whilst mowing the lawn or accidental damage to cables and underground pipes
Buildings protected no-claim discount
Allows 2 claims in 5 years without losing your no-claim discount and your premium won’t be affected as a direct result of those claims
You’ll have to pay the first part of most claims. Your policy schedule will provide details of the applicable excess. Here are some of the things that aren’t covered
The policy document [PDF, 892KB] provides full details of what is and isn’t covered. The list we’ve shown above is only intended as a guide.
Unlimited sum insured* for your possessions while they’re in your property
*subject to eligibility criteria
Unlimited sum insured against theft or damage to your possessions – no need to specify the level of cover
Cover for undamaged items that form part of a set, suite or pair if one item is damaged and can’t be repaired or replaced with a matching item
Protection against malicious damage to your property caused by your tenants up to a value of £5,000
Up to £10,000 for loss of rent if your tenants are unable to live in the property due to an event covered under this policy
We’ll cover the cost of replacement locks if your keys are lost or stolen, keeping your property secure – up to £1,000
Cover for those little accidents, caused by you or your tenants, such as spilling red wine on your carpet
Contents protected no-claim discount
Allows 2 claims in 5 years without losing your no-claim discount and your premium won’t be affected as a direct result of those claims
The policy document [PDF, 892KB] provides full details of what is and isn’t covered. The list we’ve shown above is only intended as a guide
Cover for your possessions while they’re in your property
Sum insured limits from £2,000 - £15,000
Protection against malicious damage to your contents caused by your tenants up to a value of £1,000
We’ll cover the cost of replacement locks if your keys are lost or stolen, keeping your property secure – up to £1,000
Cover for those little accidents, caused by you or your tenants, such as spilling red wine on your carpet
Contents protected no-claim discount
Allows 2 claims in 5 years without losing your no-claim discount and your premium won’t be affected as a direct result of those claims
The policy document [PDF, 892KB] provides full details of what is and isn’t covered. The list we've shown above is only intended as a guide.
Get unlimited rebuild and repair costs for your rental properties, with loss of rent and alternative tenant accommodation all part of the package too.
Letting a property furnished? Contents cover for landlords gives you an unlimited sum insured for your possessions and we also cover malicious damage caused by tenants.
If you’ve only got a few items in your rental property but still want protection, then try our starter contents for landlords for a more flexible option.
Log in to make a new claim or update an existing claim.
Log in to view and download your policy documents, update your details or insure more items.
Barclays Bank UK PLC and Barclays Bank PLC are each authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Barclays Insurance Services Company Limited and Barclays Investment Solutions Limited are each authorised and regulated by the Financial Conduct Authority.
Registered office for all: 1 Churchill Place, London E14 5HP
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