Thanks for the answer.
There is some further information my partner has just shared.
She has let the flat out for all but 18 months of the ownership period.
After reviewing HS283, if we were to dispose of the property now the gain would be £67,500.
We would get private residence relief on the 18 months she had it as a main residence and the last 36 months, equating to 54 months relief out of a total 156 months ownership. Therefore 54/156=0.346 which equates to relief of £23,355.
The remaining let period is 102 months therefore 102/156=0.654 which equates to £44,145. However the cap is the amount of Private Residence Relief already calculated, or £40,000, or the amount of any chargeable gain you make because of the letting (calculated as a fraction of the gain – the fraction being the period of letting/divided by the period of ownership), whichever is the least.
Which means the chargeable gain is £44,145-£23,355 = £20,790.
We would utilise the capital gains tax annual exempt amount of £11,100 therefore the amount subject to tax is £20,790-£11,100 = £9690.
My partner and I are both higher rate tax payers therefore tax is charged at 28% therefore we would have to pay the inland revenue £9690x0.28 = £2713.20
Are my assumptions and calculations correct Tony?
Thanks - Paul