UK Property Tax Guide

Guide to UK property taxation

When buying a residential property in the UK, it always best to seek tax advice and gather as much info as early as possible. The Four UK taxes to take in to consideration when buying a property are Stamp Duty Land Tax, Income Tax, Capital Gains Tax and Inheritance Tax. Additionally, keep in mind that your tax position will vary depending on other UK income you already have.

Property Taxes

1. Stamp Duty Land Tax(SDLT) (Transfer Fee)

The Stamp Duty Land Tax (SDLT) is payable on all property purchases, except for those that fall below the threshold, in which case specified tax reliefs apply. The tax rate depends on different factors as well as the purchase price. To find out more you can go to the UK Residential Stamp Duty Calculator online and check.

https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro

2. Income Tax

Income tax is chargeable on rental income from a property owned in the UK, however, each individual is allowed a threshold of £11,850 which is tax free. Income tax is chargeable on rental income regardless of the residence or domicile position of the investor.

3. Capital Gains Tax

Capital Gains Tax (CGT) is charged on the profit made from the sale of a property in the UK. Expenses and building improvement costs can be deducted from the profit to reduce the taxed figure.

  • 18% and 28% for individuals (the tax rate you use depends on the total amount of your taxable income)
  • 28% for trustees
  • 20% for companies

4. Inheritance Tax

The threshold for inheritance tax is £325,000 or £650,000. In the case of married couples/civil partners) is generally 40% unless it is left to a spouse/civil partner or to a UK charity.