What taxes do landlords have to pay in the UK?

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:

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 👇

2. Rental Income Tax

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

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

This visual helps helps break it down 👇

3. National Insurance

You need to pay Class 2 National Insurance on your rental income if:

• HMRC decides that you have “a property business”
• Your profits are over £6,725 per year

You need to pay Class 4 National Insurance on your rental income if you make more than £12,570 per year.

4. Capital Gains Tax (CGT)

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

You don’t pay CGT for:

• Capital gains under £6,000
• Selling your main home

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“):