Buying a first rental property Buying a first rental property

Buying a first rental property

Managing your portfolio Managing your portfolio

Managing your portfolio

Growing your portfolio Growing your portfolio

Growing your portfolio

Selling your property Selling your property

Selling your property

How to avoid tax mistakes Allowable cost Common mistakes Inheritance tax Stamp duty Landlord tax

Landlord tax

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uk-landlord tax details
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Individual
Limited Company
Tax on rental income arrow

Individuals pay Income Tax on rental profits at their marginal rate of tax. Income tax rates are 20% for basic rate taxpayers, 40% for higher rate and 45% additional rate taxpayers.

Tax on property purchases arrow

On property purchases in England or Northern Ireland, individuals pay Stamp Duty Land Tax. Stamp Duty Land Tax rates if, after buying the property, it is the only property you own, are as follows:

Property value Rate
Up to £125,000 0%
The next £125,000
(From £125,001 to £250,000)		 2%
The next £675,000
(From £250,001 to £925,000)		 5%
The next £575,000
(From £925,001 to £1,500,000)		 10%
Upwards from £1,500,001 12%

You usually pay 5% on top of these rates if you own another residential property after the purchase i.e., a buy to let property.

Properties attract similar land transaction taxes in Scotland (Land and Buildings Transaction Tax) and Wales (Land Transaction Tax) ranging from 0% - 16% depending on the property values.

Non-UK residents who purchase UK properties are subject to an additional 2% surcharge.

Tax on property sales arrow

Individuals are required to pay Capital Gains Tax (CGT) on any gains made on the sale of a property. CGT rates for residential properties are 18% for basic rate taxpayers and 24% for higher rate taxpayers.

Furnished Holiday Lettings (FHL) arrow

For individuals and limited companies, if their turnover exceeds £90,000 over a 12-month period from a property that meets certain furnished holiday lettings criteria, you must register for VAT. This will mean that you will be required to charge VAT on your income and submit VAT returns.

Tax on death arrow

An individual’s equity in their properties form part of their Inheritance Tax estate. On death, the value of the properties in excess of the £325,000 nil rate band, will be subject to an Inheritance Tax charge of up to 40%. Where an individual owns a main residence, there is a further nil rate band of £175,000.

Annual Tax on Enveloped Dwellings (ATED) arrow

No Annual Tax on Enveloped Dwellings is chargeable to individuals holding properties personally.

Tax on rental income arrow

Limited companies pay corporation tax on rental profits which is 19% on profits up to £50,000 and 25% on profits exceeding £250,000.

Limited companies may be entitled to Marginal Relief on profits between £50,000 and £250,000.

Tax on property purchases arrow

Limited companies pay the same rates as individuals on properties valued up to £500,000 however, the additional 5% applies to all property purchases.

For residential properties costing more than £500,000, SDLT is charged at 17% of the property value.

Tax on property sales arrow

Limited companies pay corporation tax on gains made from property sales at the same rates as any rental profits i.e., 19%/25%.

Furnished Holiday Lettings (FHL) arrow

For individuals and limited companies, if their turnover exceeds £90,000 over a 12-month period from a property that meets certain FHL criteria, you must register for VAT. This will mean that you will be required to charge VAT on your income and submit VAT returns.

Tax on death arrow

On death, the value of the company shares form part of a shareholder’s inheritance tax estate. The value is derivable from the market value of the properties. The value of their shares will be subject to an inheritance tax charge of up to 40% in excess of the £325,000 nil rate band.

Annual Tax on Enveloped Dwellings (ATED) arrow

When properties are owned by privately held companies and the value of the property exceeds £500,000, ATED may be chargeable between £4,450 and £292,350 per annum.

Please note, the figures used for ATED are based on the chargeable amounts from April 1st 2025 – 31st March 2026 and vary from year to year.

No ATED is payable if the company in question runs a business utilising the property for their whole financial year, for example; commercial lettings and property development.

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