Capital gains and house rental

Yes, in principle, but it will depend on a number of details.

One of the important questions in relation to the house you own is whether you have ever lived in it (while you owned it).

Only indirectly.

If you are entitled to any private residence relief (in respect of periods when you have lived in it) then the fact that it has been let may actually reduce your liability.

You must pay income tax on the profit of your rental business. So, as you say, mortgage interest is an allowable expense, likewise insurance, repairs and maintenance (but not improvements), and if it's furnished you may deduct *either* the cost of repairs/replacements to contents

*or* a blanket 10% of gross rental income. If there is anything left after those deductions, you must pay IT (but not NI) on it at your marginal rate. Even if you only break even (or indeed make a loss) you need to fill in the Land & Property pages of your tax return.

If this situation has already been going on for years, and you've never yet told the tax man about it, you'll have some serious grovelling to do.

The important thing to know is that there are two totally separate tax regimes. One is the revenue side, which concerns itself with running profit, and is accounted for annually. The other is the capital side, for acquisition and improvement and disposal, and is accounted for only once, namely on disposal.

Sell at a loss. :-) Not funny, I know. But with prices predicted to fall, it could happen.

If you have never lived there, move there for a decent while before you sell. This will trigger the "36 month rule" and will also create eligibility for Lettings Relief.

I did live there before doing this. It has also stood empty for a couple of years after I left it.

Then you're in luck, because it enables both the 36-month rule and Lettings Relief. It also avoids the danger of the genuineness of any brief pre-sale residential status being disputed.

For further details, see the answer I gave on Friday in the thread "Property Tax Question".

The empty years are the problem.

It sounds like it is too late to nominate your own property as your PPR - and would make no difference if you are selling it shortly. But it is worth bearing in mind should future circumstances repeat themselves.