If the property is your only property at the moment, you are living in it and have been generally doing so for ages, and you are UK resident, it is treated as your owner-occupied dwelling, and not subject to Capital Gains Tax if you sell it now.

If you buy a further property, with or without a mortgage, you can elect within a limited period for one of them to be your owner-occupied house, though the HMRC people will probably not believe you if you saying that a house is owner-occupied if it's let out!!

You need to talk to a good accountant who can explain the merits or snags of election, tell you the time limits for doing so, and generally keep you making the decisions that reduce your tax rather than aggravating it.

Note that Capital Gains Tax starts at 18% on any gain that is chargeable and over the current year's exempt amount, but if the gain is big enough, and/or other income is large enough, you can find the liability rising to (for example) 28%. It depends on what other income you have, and how big the gain is.

Again, I can only point you towards getting professional advice - it will save you money!!

As others have already said, no Capital Gains Tax on Principal Residence but there may be CGT on your investment property. Again, to repeat, your mortgage on the investment property will have no effect on the potential CGT, but it can be offset against the rental income for Income Tax purposes.

However -

"Note that Capital Gains Tax starts at 18% on any gain that is chargeable and over the current year's exempt amount, but if the gain is big enough, and/or other income is large enough, you can find the liability rising to (for example) 28%. It depends on what other income you have, and how big the gain is".

- not quite. Capital Gains Tax is charged on any gain above the annual exempt amount (currently £10,600). The 18% rate only applies to the total of chargeable gains AND ALL OTHER TAXABLE INCOME up to £34,370. Thereafter, it is 28%. Thus, if you are already paying higher rate income tax, or have income using up most of your Basic Rate income tax band, you will most likely be charged the higher rate of CGT.

thanks guy's i'm a bit clearer, but will probably look up an accountant before i make a decision