Answers · UK 2025/26
What are the tax implications of buying a rental property in the UK?
On purchase: SDLT + 5% Additional Property Surcharge (raised from 3% in October 2024). Annually: rental income tax + 20% mortgage interest credit (Section 24). On sale: CGT 18%/24% above £3,000 AEA, 60-day reporting.
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UK rental property tax lifecycle 2025/26. PURCHASE. SDLT England/NI: standard + 5% surcharge (from 31 October 2024). £250k BTL = £15,000 SDLT (£2,500 + £12,500). Scotland LBTT + 8% ADS (up from 6% on 5 December 2024). Wales LTT + 4% higher rates. ANNUAL. Profit = gross rent − allowable expenses (letting agent 10-15%, repairs, insurance, ground rent, fees). Mortgage interest NOT deductible — 20% basic-rate credit instead (Section 24). Higher-rate landlord pays ~£900-£1,800 more annually vs pre-2017. Limited company alternative: CT 19-25% on profit including full interest deduction; useful above ~£50k profit. SALE. CGT 18%/24% above £3,000 AEA. Report/pay within 60 days. DEATH. Full value in estate for IHT 40% above NRB.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.