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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. 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 £425,000 of your purchase.
You pay 5% Stamp Duty on amount up to £625,000. For you, this is £3,750.
Your Stamp Duty Land Tax total is £3,750.
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 £125,140 | 40% | Higher rate |
over £125,141 | 45% | Additional rate |
Check out our guide to paying tax on rental income for more information.
This visual helps helps break it down 👇
There are two types of National Insurance that you’ll need to pay:
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 | 24% |
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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