Years ago Mrs M’s grandmother left her enough money for the deposit on a flat, which we’ve been letting. We now want to sell this to buy a small house which we would also rent out.
Prices have increased in the meantime, so capital gains tax seems payable on the sale, meaning we would have to “downshift” in letting terms.,

Is there a way of avoiding the capital gains, since we will effectively be swapping properties?

No way to avoid.

Nope. You need a licencsed conveyancer to rewrite the deeds and the licencsed conveyancer is also duty bound to tell the inland revenue or he’ll lose his licence. If that property was your main residence on other hand……

You can’t avoid it but make sure you claim all applicable “reliefs”

HMRC Relief Web page

Having just read that it might not apply unless you’ve lived in the house for some of the time.

last sentence from Jekkyl +1

‘flipping’ might work (move there temporarily, declare main residence, sell, move out).
Ask your local MP, they seem quite adept at it..

If the flat’s generating an income why sell it?

I imagine the return might not be great if the flat value has increased but the rent has not increased proportionally?
If so why don’t you remortgage the flat and release some equity to buy the other property, and have two BTL’s?
Mortgage interest is a tax deductable.
Talk to a BTL mortgage expert, we have used John Charcol and London & Country before. Both have been really good.

If you want to evade tax then its easy

just kick the tenant out, put your mrs name on the bills, pretend you’ve split up, then a few months later flog it and your laughing.

Also the RLA are good. Membership is currently £70 a year, and they have excellent mortgage brokers, tax advice and legal advice.

I have a friend who did up houses, he used to move into each one for 6 months then sell it Capital Gains Free….

I have a friend who did up houses, he used to move into each one for 6 months then sell it Capital Gains Free….

This may have worked a long time ago but it does not work and has not for the last 15 or so years, if you do more than 3 in 3 years (or something like that, can’t remember exactly) they make you a trader. The revenue are not dumb.