UK Property Tax Guide

UK Property Tax Guide

Guide to UK property taxation for expats and non-residents

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.

Currently the government has set in place a Stamp Duty Holiday which allows all buyers to benefit. This is set for a limited period until March 31st 2021.

It allows anybody buying a property as their primary residence to pay no stamp duty for the amount up to Ā£500,000. Investors and buy to let purchasers will pay a flat Stamp Duty Tax of 3% up to Ā£500,000 saving on the previous taxes.

To find out more you can go to theĀ UK Residential Stamp Duty CalculatorĀ online and check by clicking here.

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 Ā£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 Ā£325,000 or Ā£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.