Last updated: 14 October 2026
Will working from home affect capital gains tax when you sell your house?
Usually not. If you use a room for work and it is also used for personal purposes, even occasionally, your whole home normally keeps full private residence relief (PRR). Capital gains tax can only apply to part of the gain if a part of the house was used exclusively for business, for example a room fitted out as an office and never used privately.
How private residence relief works
When you sell your only or main home, the gain is normally exempt from CGT. That applies if:
- it has been your main residence throughout your ownership, apart from the last 9 months, which always qualify
- the garden and grounds are 5,000 square metres (about 1.2 acres) or less
- no part has been used exclusively for business
The “exclusive business use” test
Mixed use: no CGT
A spare bedroom used as an office during the day, which also holds a guest bed, family storage or a games console, is not used exclusively for business. Full relief remains.
Exclusive use: a partial CGT charge
A garage converted into a workshop or treatment room and used only for the business loses relief for that part of the property. The gain is apportioned by a reasonable method, such as floor area or number of rooms, adjusted for how long it was used that way.
Example
Tom bought a 6-room house and used one room exclusively as a consulting room for 10 of his 15 years of ownership. He sells with a gain of £180,000.
- Business share: 1/6 × 10/15 = 11.1%
- Chargeable gain: about £20,000
- Less the £3,000 annual exempt amount: £17,000
- CGT at 18% or 24% for residential property: £3,060 to £4,080
Use-of-home claims and CGT
Claiming a share of household bills as a business expense, such as the HMRC flat rate or a proportion of utilities, doesn’t by itself mean exclusive use. What matters is how the space is actually used. Self-employed people can usually make modest use-of-home claims without affecting PRR.
Company directors renting a room to their company
If your limited company pays you rent for a home office, keep the room available for personal use. The rent is taxable property income for you, and an exclusive-use arrangement could affect PRR.
Reporting and paying CGT
If any CGT is due on the sale of a UK residential property, you must report it and pay the tax within 60 days of completion, using HMRC’s UK property CGT service.
Keep photographs or other evidence of how home office space is used.
Frequently asked questions
Does the change to working from home relief for employees affect this?
No. That change only affects income tax relief. See working from home tax relief.
I run a childminding business at home. Is that exclusive use?
Usually not, because the rooms are also family space.
Can I avoid a partial charge?
Make sure the space has some genuine private use. Keep evidence of this.
What if I let a room to a lodger?
Letting relief of up to £40,000 may apply if you share the home with the tenant.
Related: capital gains on a property gift.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with capital gains tax on your home. See our property tax accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
