Taxes on purchase 

A person acquiring land or buildings in England and Northern Ireland may need to pay stamp duty land tax (SDLT). Buyers in Scotland may need to pay land and buildings transaction tax (LBTT) and in Wales, land transaction tax (LTT). 

SDLT is calculated by reference to bands and each band has its own rate of tax. Different bands and rates apply depending on whether the property is residential or non-residential. The calculation can be more complicated for residential property as: 

• the purchaser may qualify for a relief; or 
• higher rates may apply, for example, on the purchase of an additional dwelling (eg, a second home or buy to let). 

Based on the latest estimates, SDLT raised £13.9bn for the UK government in 2024/25, an increase of £2.2bn (19%) compared to 2023/24. However, caution should be exercised when making comparisons as SDLT receipts can fluctuate year-on-year due to the impact of changes in rates and reliefs, and in the property market. Making comparisons over a longer period is also difficult due in part to the introduction of LBTT from 1 Aril 2015 and LTT from 1 April 2018.   

Taxes on occupation 

The occupant of a property may need to pay: 

• council tax (rates, in Northern Ireland), if it’s a domestic property; or
• business rates, if it’s a non-domestic property.  

Council tax and business rates are devolved taxes and so the rules vary across the UK.  Broadly, council tax is calculated by the local authority based on which band the property falls into and also taking into account sales values on 1 April 1991 in England and Scotland and 1 April 2003 in Wales. The business rates liability is found by applying a multiplier to the property’s rateable value. In both cases, exemptions or discounts may be available. 

The Office of Budget Responsibility estimates that council tax receipts will total £50.2bn, and business rates £33.7bn in 2025/26. Council tax funds a significant proportion of local authority expenditure. 

Taxes on ownership 

Profits from a property rental business are subject to income tax for individuals and to corporation tax for companies.  

Where the landlord is not UK resident, the letting agent, or tenant if there is no letting agent, must deduct tax from the rent and pay it to HMRC. The landlord can apply to HMRC for the rent to be paid without deduction of tax.  

A company that owns residential property worth over £500,000 may need to pay the annual tax on enveloped dwellings (ATED). Several reliefs apply, including for property let on a commercial basis. The reliefs must be claimed by completing a ATED relief declaration return. 

Taxes on disposal 

Capital gains tax (CGT) may be payable where an individual sells or gives away land and buildings. CGT is calculated by applying the appropriate rate(s) to the gain. This is the amount by which net sales proceeds (or market value in some cases) exceeds purchase costs and, if not used, the annual exempt amount (AEA). CGT is not payable where the property has been occupied by the owner as their principal residence throughout the period of ownership. Companies are liable to corporation tax on their gains. 

Inheritance tax (IHT) may be payable on the value of property given away within seven years of death or included in the deceased’s estate. No IHT is payable where the value of the property falls within the person’s nil rate band or the residence nil rate band.  

VAT 

A supply of land and buildings, or a supply of services in respect of land and buildings, may be exempt from VAT, or charged to VAT at the zero, reduced or standard rate, depending on the circumstances. For guidance on VAT, see Land and property (VAT Notice 742) - GOV.UK.