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There are five main types of tax that landlords have to pay:
Stamp duty is usually the first tax that landlords have to deal with.
You pay it when you buy any property in the UK. In 2020, Rishi Sunak announced a Stamp Duty holiday. Take a look at how this changed the rates. From October 2021, the rates went back to normal. You won’t be able to backdate to claim it.
The Stamp Duty rate depends on the property purchase price:
| Property purchase price | Stamp duty |
|---|---|
| up to £125,000 | 0% |
| £125,001 – £250,000 | 2% |
| £250,001 – £925,000 | 5% |
| £925,001 – £1,500,000 | 10% |
| over £1,500,000 | 12% |
You pay an additional 3% in Stamp Duty if you’re purchasing:
Scotland and Wales have different rates and exemptions.
Want to work out what you owe in Stamp Duty? Check out our Stamp Duty calculator 👇
The Stamp Duty you pay is calculated based on the price of the property you’re buying.
In your case, £500,000.
As you’re a first-time buyer, you don’t pay Stamp Duty Land Tax on the first £300,000 of your purchase.
You pay 5% Stamp Duty on amount up to £500,000. For you, this is £10,000.
Your Stamp Duty Land Tax total is £10,000.
To calculate it, add the rent (minus expenses) to your other income sources: this determines your tax band.
| Income | Tax rate | Description |
|---|---|---|
| up to £12,570 | 0% | Personal allowance |
| £12,571 to £50,270 | 20% | Basic rate |
| £50,271 to £150,000 | 40% | Higher rate |
| over £150,000 | 45% | Additional rate |
Check out our guide to paying tax on rental income for more information.
This visual helps helps break it down 👇
You need to pay Class 2 National Insurance on your rental income if:
You need to pay CGT when you sell property for a profit:
| Overall annual income | CGT rate (applies to your entire CGT profit) |
|---|---|
| below £50,270 | 18% |
| over £50,000 | 28% |
You don’t pay CGT for:
Check out our CGT calculator for more details.
How you pay CGT on property:
Inheritance tax is a tax on everything you leave when you pass away (also called your “estate“):
| Who owns the estate | Estate value | Inheritance tax |
|---|---|---|
| You | under £325,000 | 0% |
| You | over £325,001 | 40% |
| Couple / Civil partnership | under £650,000 | 0% |
| Couple / Civil partnership | over £325,001 | 40% |
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