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.
You pay it when you buy any property in the UK.
The rate depends on the 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:
- a buy-to-let investment
- a second home.
Scotland and Wales have different rates and exemptions.
2. Rental Income Tax
To calculate it, add the rent (minus expenses) to your other income sources: this determines your tax band.
| Income | Tax rate | Description |
|---|---|---|
| up to £12,500 | 0 % | Personal allowance |
| £12,501 to £50,000 | 20 % | Basic rate |
| £50,001 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.
3. National Insurance
You need to pay Class 2 National Insurance on your rental income if:
- HMRC decides that you have “a property business”, and
- your profits are over £6,205 per year.
4. Capital Gains Tax (CGT)
You need to pay CGT when you sell property for a profit:
| Overall annual income | CGT rate (applies to your entire CGT profit) |
|---|---|
| below £50,000 | 18 % |
| over £50,000 | 28 % |
Most people do it via their annual tax return.
You don’t pay CGT for:
- capital gains under £12,000.
- selling your main home.
Check out our CGT calculator for more details.
5. Inheritance tax
Inheritance tax is a tax on everything you leave when you pass away (including properties):
| Who owns the estate | Estate value | Inheritance tax |
|---|---|---|
| Yourself | under £325,000 | 0% |
| Yourself | over £325,001 | 40% |
| Couple / Civil Partnership | under £650,000 | 0% |
| Couple / Civil Partnership | over £325,001 | 40% |