If you are renovating your house, make sure to keep all invoices and receipts. It might reduce your tax bill in future!

Normally when you sell your main residence it doesn’t matter what you spent on improving it as the gain is exempt under Private Residence Relief (which is horribly named – it’s an exemption not a relief – but that’s a separate issue).

But if you decide to buy another house and keep your original residence as a rental you will be partially taxable on the gain when you sell your original residence. From this gain, you can deduct capital improvements – e.g new kitchens, renovations, extensions etc.

Simple example – you bought a house for £300k in 2005, lived in it until 2015 but kept it as a rental, then sold it in 2025 for £500k.

Broadly half of the £200k gain would be taxable and half exempt, giving tax payable of about £100k x 24% = £24k.*

But let’s say when you moved in you spent £50k improving the house. In this case, the gain would be £200k – £50k = £150k. Half of this would be taxable, giving tax payable of about £75k x 24% = £18k.

The issue a lot of clients have is that they cannot remember or evidence how much they spent (say) 20 years ago on a renovation, and further they would not be able to prove it in the event of a HMRC enquiry.

Digitalisation of invoices/receipts etc is a good idea in these circumstances.