Hi - Your old council house is (PPR) exempt from CGT up until you moved out in 1989 then for a further three year period from that date under HMRC rules, which takes your CGT exemption right up to the third anniversary date in 1992.

From that point on, as it was once your main PPR (principal private residence) and you have continued to rent it out as a private residence, it will qualify for up to £40,000 additional, 'Private Letting Relief' to be deducted from any gain it has made from that point in 1992.

What you need to do is acquire the value of the property as it stood in 1992, then deduct that value from the sale price it achieves when you sell it, this will give you the overall gain.

From that figure you can knock off up to the first 40k of gain as private letting relief, then you are allowed to deduct your own personal CGT exemption allowance(s) for this year 2010/2011 (currently £10,100 each owner).

Once you do the calculations you may well find that due to the private letting relief and your own personal allowances, that any gain has been negated and perhaps either none or very little CGT is actually due.?

If there is a nett gain, then you would have to pay 18% on that gain, there is no way around that I'm afraid HMRC can and do carry out stringent checks, it is not advisable or worth the consequences of trying to avoid tax where it is due.