Taxes you need to know when buying or renting in the UK

Whether you’re hunting for your first flat, upgrading to a family house, or collecting rent from a buy‑to‑let, taxes will show up on the bill. The good news is they’re not as mysterious as they seem. Below you’ll find the key taxes that touch most property deals, plus tips to lower the impact.

Stamp Duty Land Tax (SDLT) – the upfront cost

When you buy a residential property in England and Northern Ireland, you pay SDLT on the purchase price. The rates are tiered – the first £250,000 is tax‑free, then 5% on the next slice up to £925,000, and it climbs from there. First‑time buyers get a relief that wipes out SDLT on the first £425,000, which can save you several thousand pounds.

To keep the cost down, think about splitting the purchase into a lower‑priced property plus a separate purchase (like a lease‑hold) if that fits your plan, or look at eligible government schemes that reduce the rate.

Council Tax, Rental Income Tax and Capital Gains Tax

Council Tax is an annual charge based on your property's band. It funds local services, so you’ll see a bill every year. If you’re a tenant, your landlord usually includes it in the rent; if you own, you’ll pay it directly.

Renting out a property adds rental income tax. The first £1,000 of rental profit is tax‑free under the “Property Allowance”. Anything above that joins your other income and is taxed at your marginal rate. Keep good records of mortgage interest, repairs, and letting fees – they can be deducted.

When you eventually sell, Capital Gains Tax (CGT) may apply to the profit. Your primary residence is exempt, but a buy‑to‑let or second home isn’t. You get an annual CGT allowance (£12,300 for 2024‑25); anything above is taxed at 18% or 28% depending on your income bracket. Strategies like moving to the property before selling or gifting shares can help reduce the bill.

Lastly, if you inherit a property, Inheritance Tax (IHT) may apply. The first £325,000 is tax‑free per person, and a main‑home relief can increase that limit if the home is passed to a direct descendant.

Understanding these taxes early lets you budget realistically and avoid nasty surprises at settlement. Use online calculators to estimate SDLT, council tax, and CGT before you sign any agreement. And don’t hesitate to chat with a tax adviser – a quick call can uncover reliefs you might miss on your own.

Bottom line: taxes are a part of every property move, but they don’t have to derail your plans. Keep the basics in mind, track your expenses, and look for reliefs that match your situation. With a clear picture, you can focus on finding the right home instead of worrying about hidden costs.