⚠️ We are currently updating our 2021/22 tax guidance across the website
Capital gains tax (CGT) for carers
Disabled people and carers
Normally, when a person sells or disposes of their only or main residence, they get relief from capital gains tax on any resulting gain – private residence relief (PRR). However, if part of the residence has been used for business purposes, relief is restricted on that part. We explain further below.
Does this mean I will have to pay CGT because I’ve been a carer?
No, it does not.
Originally, both foster carers and shared lives (adult placement) carers were denied PRR on the proportion of their residence that was set aside for the use of the children or adults in their care, because they were regarded for tax purposes as running a business. This has now been changed and both foster and shared lives (adult placement) carers can claim capital gains tax PRR on any gain accruing to them from the disposal of their private residence, even where part of the house has been used for fostering or supporting a shared lives service user.
Accordingly, both foster carers and shared lives carers can now qualify for full PRR when they come to sell their residences in which they have looked after the children or adults in their care, provided that they satisfy the other conditions for the relief.