The taxes you meet when you buy, own and sell property in England, and how they shape your budget from the start.
Knowing your full budget before you start looking saves time and avoids surprises. The price of the home is only part of it: your budget also needs to cover taxes, mortgage costs and professional fees. This guide explains the main taxes for buyers of property in England, so you can plan with confidence. We confirm the exact figures for your purchase before you commit.
The costs to plan for
- Stamp Duty Land Tax (SDLT), paid once when you buy
- Legal fees for conveyancing and searches
- Mortgage costs such as arrangement and valuation fees, if you borrow
- Ongoing costs such as service charge, insurance and letting fees
- Tax on rental income and on any gain when you sell
Stamp Duty Land Tax
SDLT is a one off tax on buying property or land in England and Northern Ireland. It applies to UK and non UK buyers alike, and it must be paid to HMRC within 14 days of completion. Scotland and Wales have their own versions (LBTT and LTT) with different rates.
Standard residential rates
Since 1 April 2025, SDLT on a residential purchase is worked out in bands, like income tax:
| Part of the price | Rate |
|---|---|
| Up to £125,000 | 0% |
| £125,001 to £250,000 | 2% |
| £250,001 to £925,000 | 5% |
| £925,001 to £1.5 million | 10% |
| Above £1.5 million | 12% |
First time buyers who will live in the home pay no SDLT on the first £300,000 and 5% on the part from £300,001 to £500,000. The relief does not apply to homes above £500,000, or if you have owned a home anywhere in the world before.
Higher rates for additional homes
If you already own a residential property anywhere in the world, or you buy through a company, a surcharge of 5 percentage points is added to each band. Most investors buying a rental property pay these higher rates.
Surcharge for non UK residents
Buyers who are not UK resident for SDLT purposes pay a further 2 percentage points on each band. For individuals, you count as UK resident if you spent at least 183 days in the UK in any continuous 12 months within the year before your purchase. If you did not, but you meet the test in the year after you buy, you may be able to claim the surcharge back.
An example. Hasan lives in Austria and buys a home in England for £800,000 on 1 June 2025. Between 2 June 2024 and 1 June 2025 he spent 200 days in the UK, so he is treated as UK resident for SDLT and the 2% surcharge does not apply. Had he spent fewer than 183 days, the surcharge would apply, with a possible refund later.
Commercial and mixed use property
Offices, shops and mixed use buildings (such as a flat above a shop) use non residential rates: 0% up to £150,000, 2% from £150,001 to £250,000 and 5% above £250,000. New commercial leases also pay SDLT on the net present value of the rent: 0% up to £150,000, 1% from £150,001 to £5 million and 2% above that.
Taxes while you own the property
Tax on rental income
Rent from UK property is taxable in the UK, whether you live here or abroad. Individuals pay income tax on the profit after allowable costs. Mortgage interest is not deducted as a cost for individuals; instead you receive a tax credit at the basic rate. Non resident landlords should register with HMRC under the Non Resident Landlord Scheme, otherwise the letting agent or tenant may have to deduct basic rate tax from the rent.
Companies
A UK company pays corporation tax on its profits: 19% on profits up to £50,000 and 25% above £250,000, with a sliding rate in between. Mortgage interest is treated as a normal business cost. Companies that own a home worth more than £500,000 may also need to file an Annual Tax on Enveloped Dwellings (ATED) return, although relief is usually available for genuine rental businesses. Read our guide Personal name or company? for a side by side comparison.
Taxes when you sell or pass on property
Capital Gains Tax
If you sell a property for more than you paid, Capital Gains Tax may be due on the gain, after allowable costs such as SDLT and legal fees. For individuals the rates on residential property are 18% and 24%, depending on your income. Non UK residents must also report the sale of UK property to HMRC within 60 days of completion, even if there is no tax to pay.
Inheritance Tax
UK property is within the scope of UK Inheritance Tax whatever your residence. Tax at 40% may apply to the part of an estate above the nil rate band of £325,000. A UK will and early planning can make a large difference, and holding property through a company or trust changes how the rules apply.
How we help
Every purchase is different. Your residence, your other property, how you finance the purchase and whether you buy personally or through a company all change the tax you pay. Before you reserve, our solicitors set out the expected SDLT and the ongoing tax position for your situation, and work with your accountant where needed.
This guide is general information about the rules in England at the time of writing, not tax advice. Rates and reliefs change with UK budgets; we confirm the current figures for your purchase.
