If you’re considering buying, selling, or investing in UK property, understanding UK property tax is crucial to maximising returns and avoiding costly surprises. At HomeSeekUK, we specialise in helping clients find cheap and valuable homes across the UK, while guiding you seamlessly through every stage of the property journey. If you have questions or want expert help, contact our team at enquire@homeseekuk.com.
Table: Key UK Property Tax Rates in 2025
| Tax Type | Taxpayer Type | Rate/Thresholds |
|---|---|---|
| Stamp Duty Land Tax (SDLT) | All buyers | 0% up to £125,000; 2% £125,001-£250,000; 5% £250,001-£925,000; 10% £925,001-£1.5m; 12% over £1.5mgov+2 |
| SDLT Additional Surcharge | Second home/investors | +5% surcharge on all bandsmfsuk+1 |
| SDLT Non-UK Buyers | Overseas buyers | +2% surcharge on all bandsmfsuk+1 |
| SDLT First-Time Buyers | First-time buyers | 0% up to £300,000; 5% £300,001-£500,000; Standard rates abovebuyassociationgroup+1 |
| Income Tax (Rental) | Private landlords | 0% up to £12,570; 20% up to £50,270; 40% up to £125,000; 45% over £125,000mfsuk+3 |
| Capital Gains Tax (CGT) | Upon sale (residence) | 24% for residential propertyexpertsforexpats+1 |
| Inheritance Tax (IHT) | On death | 40% above £325,000 thresholdmfsuk |
What Is UK Property Tax?
UK property tax covers a range of taxes applied when you buy, own, rent out, or sell property in the UK. The three most relevant to most people are:
- Stamp Duty Land Tax (SDLT)
- Income Tax on Rental Income
- Capital Gains Tax (CGT) on Sale
- Inheritance Tax (IHT) on death
1. Stamp Duty Land Tax (SDLT)
SDLT applies when you buy residential property above set thresholds in England or Northern Ireland. Rates are tiered — you only pay the higher rate on the portion above each band.
Example: Buying a £295,000 property
- £0 to £125,000: 0%
- £125,001 to £250,000: 2%
- £250,001 to £295,000: 5%
SDLT owed:
0% on £125,000 = £0
2% on next £125,000 = £2,500
5% on final £45,000 = £2,250
Total SDLT = £4,750gov
Additional surcharges:
- 5% if buying a second home/investment
- 2% extra if you are a non-UK residentmfsuk+1
First-time buyer relief:
- No SDLT up to £300,000
- 5% rate on £300,001 to £500,000
- Standard rates above £500,000buyassociationgroup+1
2. Income Tax on Rental Income
If you rent out property, you must pay income tax on the profits. The amount depends on your total income, including other sources:
| Total Income | Income Tax Rate |
|---|---|
| Up to £12,570 | 0% |
| £12,571 – £50,270 | 20% (Basic rate) |
| £50,271 – £125,000 | 40% (Higher rate) |
| £125,001+ | 45% (Additional rate)mfsuk+1 |
You can offset certain allowable expenses, including mortgage interest (basic rate relief), repairs, management fees, insurance, and professional fees.in-accountancy+2
3. Capital Gains Tax (CGT)
When you sell property that isn’t your main home, you may owe CGT:
- 24% for residential properties for individuals (as of 2025)
- £3,000 annual exemption (2025/26 tax year)expertsforexpats+1
4. Inheritance Tax (IHT)
Properties included in your estate on death may be subject to 40% IHT above the £325,000 nil-rate band, frozen until 2030.mfsuk
Frequently Asked Questions (FAQs) About UK Property Tax
Q: Who pays SDLT?
A: The buyer of any property (not the seller) pays stamp duty.gov+1
Q: Are there any exemptions or reliefs?
A: Yes — first-time buyers and some special purchases (like multiple dwellings) may receive reliefs. Some property purchases below £125,000 (or £300,000 for first-time buyers) are exempt from SDLT.aswatax+1
Q: Do landlords face special property taxes?
A: Yes — landlords pay regular SDLT, but a 5% additional surcharge applies to additional properties bought for rental/investment.propertymark+2
Q: How is rental income taxed?
A: Add your net rental income (after deductible expenses) to your total taxable income. You then pay tax at your marginal income tax rate.gov+2
Q: What if I sell a rental property?
A: Any gain is subject to Capital Gains Tax at 24% (after your annual exemption).imperiallegal+1
Q: Is there a tax on gifted property?
A: Yes, gifts may be subject to Capital Gains Tax and potentially Inheritance Tax if the donor dies within 7 years of the gift.imperiallegal
Q: How do non-UK residents pay property tax?
A: Non-UK buyers pay the same rates but face an additional 2% SDLT surcharge. Non-residents are also subject to UK CGT on property sales.gov+2
Why Use HomeSeekUK?
At HomeSeekUK, our mission is to help you secure the best property deals in the UK and ensure every step—from searching to completion, management, and tax—runs smoothly.
Our Core Services:
- Estate Agency: Sell or let your property fast and profitably.
- Buyers’ Agent: Find your dream home or best investment property, with full negotiation support.
- Project Management: Manage refurbishments and upgrades for maximum value.
- Planning Consultancy: Navigate local planning rules with expert support.
- Secured Loans: Secure property-backed lending or invest as a lender for passive income.
Got questions about property tax or want to find out more about cheap and valuable homes throughout the UK?
Get in touch: enquire@homeseekuk.com
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