Property tax is one of the biggest costs when buying, owning, or selling a home in the UK. Whether you’re a first-time buyer, a landlord, or selling a second home, you need to understand the taxes that apply.
Stamp Duty Land Tax (SDLT)
SDLT is paid when you buy a property or land in England and Northern Ireland. Scotland and Wales have their own versions (LBTT and LTT).
Standard SDLT Thresholds (2026)
| Property Price Band | Tax Rate |
|---|---|
| £0 - £250,000 | 0% |
| £250,001 - £925,000 | 5% |
| £925,001 - £1,500,000 | 10% |
| Over £1,500,000 | 12% |
SDLT is charged on the portion of the property price that falls within each band. For example, a property costing £350,000 would be taxed as:
- First £250,000 at 0% = £0
- Next £100,000 at 5% = £5,000
- Total SDLT: £5,000
First-Time Buyer Relief
First-time buyers get relief on properties up to £625,000. The nil-rate band increases to £425,000:
| Property Price Band | Tax Rate |
|---|---|
| £0 - £425,000 | 0% |
| £425,001 - £625,000 | 5% |
| Over £625,000 | Standard rates apply |
If the property costs more than £625,000, you don’t get any relief and pay the standard rates on the full price.
Second Home Surcharge
If you’re buying an additional property (not replacing your main home), you pay a 5% surcharge on top of the standard rates. This applies to:
- Buy-to-let purchases
- Second homes
- Holiday homes
For example, on a £350,000 buy-to-let property:
- First £250,000 at 5% = £12,500
- Next £100,000 at 10% = £10,000
- Total SDLT: £22,500
Rental Income Tax
If you let out property, you must declare rental income on your Self Assessment tax return.
Allowable Expenses
You can deduct certain expenses from rental income before calculating tax:
- Mortgage interest (basic rate tax credit only)
- Letting agent fees
- Property insurance
- Maintenance and repairs
- Council tax (if you pay it)
- Utility bills (if you pay them)
Note: You cannot deduct the full mortgage interest payment. Instead, you get a 20% tax credit on the interest element.
Tax Rates on Rental Profit
Rental profit (income minus allowable expenses) is added to your other income and taxed at your marginal rate:
| Income Band | Tax Rate |
|---|---|
| £0 - £12,570 | 0% (Personal Allowance) |
| £12,571 - £50,270 | 20% |
| £50,271 - £125,140 | 40% |
| Over £125,140 | 45% |
Capital Gains Tax on Property
When you sell a property that isn’t your main home, you may owe Capital Gains Tax (CGT) on the profit.
CGT Rates for Property
| Your Income | Residential Property Rate |
|---|---|
| Basic rate taxpayer | 18% |
| Higher rate taxpayer | 24% |
| Additional rate taxpayer | 24% |
Annual CGT Allowance
You have an annual CGT allowance of £3,000 (2026/27). Only gains above this are taxed.
Reporting and Paying
You must report and pay CGT on property sales within 60 days of completion. This is done through the CGT on property service on GOV.UK.
Non-Resident Landlord Scheme
If you live outside the UK but let out property in the UK, you’re part of the Non-Resident Landlord Scheme.
Your letting agent or tenant must deduct basic rate tax (20%) from your rent before paying you. You can apply to HMRC to receive rent gross if you:
- Have a good UK tax compliance history
- File your UK tax returns on time
As a non-resident, you still need to declare rental income on a UK tax return and may need to pay more or less tax depending on your circumstances.
Key Takeaways
- SDLT: Most buyers pay nothing on the first £250,000; first-time buyers get relief up to £425,000
- Second homes: Budget for the 5% surcharge on SDLT
- Rental income: Declare on Self Assessment, deduct allowable expenses
- CGT on property: Report and pay within 60 days of sale
- Non-residents: Rent is usually taxed at source at 20%
Always check GOV.UK for the latest thresholds and rates, as they can change in each tax year.