Capital Gains Tax and Service accommodation

Monday 13th May 2024

When it comes to Capital Gains Tax the guidance can be unclear for Service personnel and families when living in Service Accommodation and renting out a property. Here we share what you need to know:

What is Capital Gains Tax?

Capital Gains Tax (CGT) is a tax on the profit over £6K when you sell (or ‘dispose of’) something (an ‘asset’) that has increased in value.  It’s the gain you make that’s taxed, not the total amount of money you receive from the sale. This can include a second property or a buy to let, if it is not your main home.

CGT and living in SFA

Service families who live in Service Family Accommodation (or equivalent) fall under HMRC’ s  ‘Job Related Accommodation’ (JRA) rule – meaning there is an exemption from paying capital gains tax (CGT) on privately owned property if it is sold.

This rule exists because often Service personnel need to live in Service Accommodation near to their parent station, when ordinarily they would live in their own property. This is part of the Chargeable gains Act of 1992, section 222(3C).

The JRA rule also covers a spouse, even if they are non-military, so they will not have to pay any CGT on their share of a co-owned property.

Capital Gains Tax and more than one privately owned property

This exemption only applies to ONE privately owned property. If you privately own more than one property, the JRA rule would not apply to the additional properties, and you will be liable to pay CGT on them when you sell.

Nomination of main residence for CGT exemption

HMRC will not automatically know you are serving and living in Service accommodation; government departments do not share information. Therefore, you will need to inform the HMRC of your status as a Service person and ‘nominate’ your privately owned property as your main residence for the purposes of CGT exemption – this will make it simpler if you sell it as HMRC will already be aware of your status.

You need to write a ‘Letter of Nomination’ to HMRC and include the following information

  • The names of the owner(s) of the property
  • NI number
  • Address of the property you are nominating
  • Date the nomination began (this must be within the past 2 years or see below)

Send your letter of nomination to:

Capital Gains Tax Queries
HM Revenue and Customs
United Kingdom

 If your home was rented more than 2 years ago

Many home owners are unaware you need to nominate a privately owned home for CGT purposes. Therefore, late nominations are allowed – as referenced in the Chargeable gains Act of 1992, section 222(5A). This is predicated on the premise that all but one of your residences during the period you are nominating have negligible capital value (i.e. SFA that is rented where a third party has invested the capital).

Points to note

  • If you receive rental allowance in lieu of SFA, you are still deemed as living in JRA.
  • You can only nominate one primary residence at a time.
  • If you are married / in a civil partnership, you and your partner can only nominate one primary residence between you.
  • Unless your rental income is less than £1000 per annum (that’s £1000 per person receiving the rental income), then you need to fill in a self-assessment to let HMRC know about it. The income must be in line with the ownership split in the deeds (or Statement of Trust if you have one drawn up).

Further information

Contact HMRC directly if you have any queries.

HMRC meaning of what JRA is (including FAM allowances):
CG64555 – Private residence relief: two or more residences: job-related accommodation – HMRC internal manual – GOV.UK (

HMRC guidance on late nominations (i.e. more than 2 years):
CG64500 – Private residence relief: only or main residence: two or more residences: late nominations – HMRC internal manual – GOV.UK (

HMRC guidance on late nominations:
Capital Gains Tax: Private Residence Relief: changes to the ancillary reliefs (consultation) (

HMRC contact details:
Capital Gains Tax – GOV.UK (
Taxation of Chargeable Gains Act 1992 (

Updated 13/05/2024

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