Real Estate Tax Uk (2026 Edition) - What You Pay With Inherited Property
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You pay UK property tax in layers, not one big bill. So if you buy, own, rent out, or sell UK residential property, you usually face Stamp Duty Land Tax (SDLT) at purchase, Council Tax while it is lived in, Income Tax on rental profit, Capital Gains Tax (CGT) when you sell, plus Inheritance Tax (IHT) if the property sits in your estate.
If you want someone to sanity-check your numbers before you commit, you can book a property tax review with MMBA.
Key highlights
- Buying (England & Northern Ireland) – SDLT is due on completion and must be filed and paid quickly.
- Second home / buy-to-let – there is an extra SDLT surcharge on top of standard rates.
- Renting out – rental profit is taxed as Income Tax (or Corporation Tax in a company). If your gross rental income is under £1,000, you usually do not report it to HMRC.
- Selling a rental/second home – CGT can apply, and you generally must report and pay within 60 days of completion for UK residential property.
- CGT allowance is shrinking – it was £6,000, and it is £3,000 for the 2025/26 tax year. Plan for future reductions.
- Owning via a company – you may face Annual Tax on Enveloped Dwellings (ATED) if the home is valued over £500,000.
Table of Content:
What taxes exist in the real estate tax UK?
There is no single real estate tax UK. Instead, you pay different taxes at different moments, depending on what you do with the property.
Here is the clean map most people actually need:
| Stage | What you are doing | The tax you usually meet | Who pays |
| Buy | Purchase a property | SDLT (or devolved equivalents) | The buyer |
| Own/live in | Someone occupies the home | Council Tax | Usually, the occupier (often the tenant if rented) |
| Own via leasehold | You lease the flat/house | Ground rent (contract charge, not a tax) | The leaseholder |
| Rent out | You collect rent | Income Tax on net profit | The landlord (uk tax resident or not) |
| Sell | You dispose of a non-main home | CGT (unless reliefs apply) | The seller |
| Die / gift planning | Property is in the estate | IHT (subject to allowances/reliefs) | The estate |
How much UK stamp duty do I pay? (SDLT, made simple)
SDLT is charged when you buy property in England and Northern Ireland. It is tiered. So each slice of the purchase price is taxed at different rates.
Standard SDLT rates (England & Northern Ireland)
You do not pay one flat rate. You pay by price slices. Then the surcharges can stack.
Deducting Expenses Properly
Yes, people treat the 0T tax code as an emergency tax code. Though it is not always labelled that way. It’s used when HMRC needs clarity fast. It does not necessarily reflect your actual tax code or long-term tax position.
The non-resident surcharge
A 2% SDLT surcharge applies to non-resident buyers of residential property in England and Northern Ireland.
Second property surcharge
If you buy additional residential properties, you pay an additional surcharge on top of standard rates.
Corporate buyers and the 15% line
What is the SDLT rate for corporate first time buyers is a fixed rate of 15%.? In practice, this depends on the transaction type, price, plus whether tax reliefs apply. But yes, corporate purchases can face punitive rates in certain high-value residential cases.
Who pays SDLT and when?
The buyer is responsible. In real life, your solicitor usually handles it. Pay SDLT to HMRC within 30 days. That line exists in a lot of older guides. Modern transactions typically operate on a faster filing/payment cycle, so this is a place where copying old wording can trip people up.
“What do I pay every year just to own a property?”
This is a very common question, often asked.
Council Tax (yes, it applies even if your income is zero)
Council Tax is paid annually by the occupier of the property.
So if you live in the home, you pay it, even if you earn nothing. That stays true regardless of residency status. If the property is rented, the tenant typically pays Council Tax because they live there.
Ground rent (only if your home sits on someone else’s land)
Ground rent is an extra annual charge some leaseholders pay to the freeholder. This is typically £50–£100 per year. That is common in older leases. Some newer leases have higher or escalating ground rent terms, so you always check your lease wording.
Mansion tax (High Value Council Tax Surcharge) from April 2028
A High Value Council Tax Surcharge is planned to apply in England to homes valued above £2 million.
- It starts in April 2028
- It is added to existing Council Tax bills
- The yearly charge is expected to range from £2,500 to £7,500, depending on value band
- UK government estimates 100,000+ households will be affected
- Critics argue it can hit long-term owners who are not treating their home as an investment property
- It signals a broader policy shift toward higher ongoing costs for high-value property ownership
“If I rent out a UK property, what tax do I pay?”
Rental income from UK property is taxed as Income Tax in the UK, even if you live abroad. If your gross rental income is under £1,000 a year, you usually do not report it to HMRC.
Once you go above that, you are taxed on the net value rental income after allowable costs. While landlords can deduct costs including mortgage interest, here are somethings to keep in mind:
- You can deduct many running costs (repairs, agent fees, insurance, local services charges, replacement items).
- Mortgage interest for individual landlords is not treated the same way it once was. Relief for finance costs is restricted to the basic rate (20%).
- Companies are treated differently and can often deduct finance costs in the normal way.
Property income (council) tax rates are set to rise by 2% from April 2027. So yes, if those planned increases land as described, it is another pressure point on landlord cash flow.
For Non-UK residents, what changes if you live abroad?
Here are the things you need to look out for.
Buying: the 2% SDLT surcharge
Non-resident buyers pay an extra 2% on SDLT when purchasing residential property in England and Northern Ireland.
Renting out: Non resident Landlord scheme
Non-resident property owners must pay tax on UK rental income. In many cases, tax is withheld at source unless you register to receive rental income without deductions and then report it properly.
Selling: non-residents can still owe CGT
Non-residents can be liable to CGT on disposals of UK residential property.
Inheritance Tax: still relevant
Non-residents must pay Inheritance Tax at a rate of 40% on the value of their UK property at death. At a high level, UK property can fall into IHT, with a general 40% rate above available personal allowances, plus the commonly referenced £325,000 nil-rate band.
When do I pay Capital Gains Tax on property?
Capital Gains Tax on property applies when you sell a property that is not fully covered by the main residence relief.
Annual CGT allowance (and the shrinking trend)
Capital Gains Tax on property applies when you sell a property that is not fully covered by the main
Here is the consolidated truth.
- The annual tax-free allowance for CGT for individuals is £6,000 in the period you referenced.
- The CGT annual exempt amount is £3,000 for the 2025/26 tax year.
- In plain terms, you only pay CGT on gains above the allowance, and the allowance has been shrinking.
residence relief.
The 60-day rule (big one)
Taxes must be reported and paid within 60 days of property sale completion. Yes. This deadline is the part people miss because they assume it happens on the usual Self Assessment timeline.
CGT rates
Some claim 18% for basic rate taxpayers and 28% for higher rate taxpayers. Those are widely quoted legacy residential property rate figures and still appear in many guides. In current practice, readers will often see updated residential property CGT rate structures depending on the tax year.
Is it CGT or is it UK Rental Income Tax? (developer vs investor)
If HMRC sees the activity as a trade, profits can be taxed as Income Tax rather than CGT.
The proceeds of sale of a development property will be subject to Income Tax rather than CGT if the property was developed or renovated and sold for a quick profit. So, if you are doing quick refurb flips, you treat that as a potential Income Tax scenario, not a CGT scenario. This is where people get burned.
Tax on Enveloped Dwellings (ATED) - the annual charge when a company owns a high-value home
Annual Tax on Enveloped Dwellings (ATED) is an annual charge that may apply to companies owning high-value residential property valued over £500,000.
Even if reliefs apply, the compliance and filing still matter.
A “tax efficient” mindset
Real estate can protect capital from inflation. That is true.
But the tax return you feel in your pocket depends on the boring stuff – how you buy, how you hold, how you finance it, plus how you exit.
Conclusion
UK property tax is not one tax. It is a stack. If you plan from the start around SDLT, Council Tax, rental profit tax, CGT deadlines, plus ownership structure, you avoid the worst surprises. The big watch-outs through 2028 are shrinking CGT allowances, fast reporting windows, tighter landlord rules, plus higher ongoing charges aimed at high-value homes
FAQs
Do you pay Council Tax if you are a non-resident owner?
If you occupy the home, yes. Council Tax applies regardless of income.
If it is rented, the tenant usually pays.
If your UK rental income is under £1,000, do you report it?
Usually no. Under £1,000 gross rental income is often covered by the property income allowance.
When exactly do you have to pay CGT after selling a UK property?
Within 60 days of completion for many UK residential property disposals where CGT applies.
Is ground rent always £50–£100?
Often in older leases. Not always in newer leases. You check the lease terms.
If you buy through a company, do you always pay 15% SDLT?
Not always. Corporate SDLT outcomes pay depend on the transaction and whether reliefs apply. Also, ATED may apply if the home is over £500,000.