Property tax is among the larger costs you will meet when buying, owning, or selling a home in the UK, and it is easy to be caught out by it because the rules differ at every stage of ownership. Whether you are a first-time buyer, a landlord, or selling a second home, there are taxes that apply — Stamp Duty Land Tax when you buy, income tax on any rent you receive, and capital gains tax when you sell something that is not your main home. The numbers change from year to year as the government adjusts thresholds, so it pays to understand the mechanics even if you always confirm the current figures before acting. This guide explains how each of these taxes works in plain terms, with the rates and worked examples spelled out.
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 — Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT) respectively.
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, not on the whole price. 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, with a higher nil-rate band:
| 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 do not 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 the rental income on your Self Assessment tax return, even if the proceeds all go toward the mortgage.
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% |
This means the tax you pay on your rental profit depends on your overall income for the year — someone on the basic rate pays less than a higher-rate earner for the same rental profit.
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.
Putting It All Together
The tax picture across a property’s life has four distinct moments. On purchase, most buyers pay nothing on the first £250,000 of Stamp Duty, first-time buyers benefit from relief up to £425,000, and anyone buying an additional home should budget for the 5% surcharge. On an ongoing basis, rental income must be declared on Self Assessment with only the allowable expenses deducted, and only a 20% tax credit applies to mortgage interest rather than the full amount. On sale of a non-main home, capital gains above the £3,000 allowance are taxed at 18% or 24% depending on your income band, and payment is due within 60 days of completion. And if you live abroad, rent is usually taxed at source at 20% through the Non-Resident Landlord Scheme unless you have permission to receive it gross.
The rates and thresholds here are as of the 2026 tax year and do change, so always check GOV.UK for the latest figures before buying, letting, or selling. If your situation is at all complex — multiple properties, joint ownership, or non-resident status — it is a sensible idea to check the current rules or take professional tax advice for your specific circumstances.