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What taxes do landlords have to pay in the UK?

  • 2 min read
  • Last updated 28 Mar 2024

There are five main types of tax that landlords have to pay:

1. Stamp Duty

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 priceStamp duty
up to £125,0000%
£125,001 – £250,0002%
£250,001 – £925,0005%
£925,001 – £1,500,00010%
over £1,500,00012%

You pay an additional 3% in Stamp Duty if you’re purchasing:

  • A buy-to-let investment
  • A second home

Scotland and Wales have different rates and exemptions.

Want to work out what you owe in Stamp Duty? Check out our Stamp Duty calculator 👇

Your situation

Outlined number oneImage of an arrow
I am buying
Property cost
I am

Tax to pay

Outlined number two
  • Your property costs
    0% tax up to £425,000
  • Stamp Duty to pay

How your Stamp Duty Land Tax is calculated

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.

2. Rental Income Tax

To calculate it, add the rent (minus expenses) to your other income sources: this determines your tax band.

IncomeTax rateDescription
up to £12,5700%Personal allowance
£12,571 to £50,27020%Basic rate
£50,271 to £125,14040%Higher rate
over £125,14145%Additional rate

Check out our guide to paying tax on rental income for more information.

This visual helps helps break it down 👇

Income tax rates UK

3. National Insurance

There are two types of National Insurance that you’ll need to pay:

  • Class 1 – this you pay via your salary if you’re employed. It’s 8% for any earnings over £12,570
  • Class 4 – this is 6% of your rental income if you make more than £12,570 (or 2% if you earn over £50,270) per year

4. Capital Gains Tax (CGT)

You need to pay CGT when you sell property for a profit:

Overall annual incomeCGT rate (applies to your entire CGT profit)
below £50,27018%
over £50,00024%

You don’t pay CGT for:

Check out our CGT calculator for more details.

How you pay CGT on property:

  • Previously, you could pay your CGT bill either by filing a Self Assessment tax return or by using HMRC’s Real Time Capital Gains Tax Service
  • Starting from April 2020, all UK tax residents who sell property for a profit (except, of course, your home), have to use only the Real Time Capital Gains Tax Service
  • This means that you don’t need to file a Self Assessment anymore unless your income changes significantly during the year (there are different CGT rates if your income is under or over £50,270), or if you have another reason to file a tax return (for example, self-employment income)

5. Inheritance tax

Inheritance tax is a tax on everything you leave when you pass away (also called your “estate“):

Who owns the estateEstate valueInheritance tax
Youunder £325,0000%
Youover £325,00140%
Couple / Civil partnershipunder £650,0000%
Couple / Civil partnershipover £325,00140%
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