Property taxes in the UK: is it expensive to buy property?

This guide looks at property tax in the UK including capital gains tax on property when you sell and how being an overseas resident can push up the costs of your new UK home.

What are the main property taxes in the UK?

So – what is a property tax, and when is it paid? Property taxes do vary a lot from one country to another so getting familiar with the UK costs is important if you intend to buy or sell a place there.

Types of property taxes in the UK include:

• Stamp Duty Land Tax, Land and Buildings Transaction Tax or Land Transaction Tax when you buy a property
• Additional taxes when you buy a property if you live abroad or are buying a second or subsequent UK property
• Capital gains taxes when you sell a property that’s not your main home
• Council tax if you live in a UK property or if you own but do not rent out a property
• Rental income taxes for owners renting a UK property
• Inheritance tax if you die and leave a UK property to a loved one

Who is subject to these taxes?

Generally people considered to be UK residents for tax purposes will be liable for UK tax on their worldwide income. Non-residents of the UK may still be liable for some UK taxes if they derive income or gains in the UK. As tax is complex – particularly when dealing with taxes across different countries and jurisdictions, you’ll need to get advice if you’re unsure about your liabilities in the UK or anywhere else in the world.

This guide is for information only. Details can change and depend on your personal situation. Take professional advice when buying or selling a UK property to ensure you comply with all tax duties in the UK and wherever you are a resident.

Taxes on buyers

The highest tax you’re likely to pay when buying a property in the UK is stamp duty. This is a devolved tax managed independently by the different countries of the UK and so the costs depend on the country of the UK you’re buying a home in:

• UK government – Stamp Duty Land Tax (England and Northern Ireland)
• Scottish government – Land and Buildings Transaction Tax
• Welsh government – Land Transaction Tax

The amounts you pay, as well as the thresholds and any exemptions which apply do vary. Generally in this guide we’ve referred to the taxes and costs when buying a property in England and Northern Ireland, so if you’re buying in Scotland or Wales do double check the details as there are some variances.

Stamp duty depends on the value of your property and whether or not you’re a first time buyer, resident or buying a second or subsequent home.

In England and Northern Ireland, stamp duty (SDLT) is calculated as follows for residents buying a residence (not a second or subsequent home):

Exemptions:

• First time home buyers purchasing a property under the value of 500,000 GBP pay no SDLT up to 300,000 GBP, and the 5% SDLT after that.

Taxes on sellers

The most important tax most people pay when selling a property is Capital Gains Tax (CGT). This applies if you’re selling a property that’s not your main home, with some variances in the way tax works based on your income and legal residence.

So how much is capital gains tax on property? Here’s a summary:

• If you’re a lower rate UK tax payer you’ll pay 18% on your gains from residential property
• If you’re a higher rate UK tax payer you’ll pay 24% on your gains from residential property

You may need to pay UK CGT on property sales even if you are not a UK resident.

Exemptions:

• People selling their UK home (residential property) do not usually pay CGT

Taxes on homeowners: recurring payments

The UK ongoing property tax for residents is called council tax, and is managed at a local level by your council in the area the property is located in. You may also be required to pay council tax if you have a UK property and leave it empty.

Council tax is calculated by looking at the council tax banding of your home, which is related to its value, and the costs imposed by your local council for that property band. Costs vary very widely in the UK depending on the location and property band.

• UK government – Council Tax explainer and links to find your local council to make payments

If you have a UK property but rent it out, you’ll usually need to report your rental income and pay HMRC tax on rental income as appropriate through the income tax self assessment system.

Exemptions:

• Some people are not required to pay council tax such as under 18s, some students and people with certain disabilities
• If you earn rental income you must report it to HMRC but you may not need to pay tax on the income, depending on your overall income in the UK and whether or not you are entitled to a tax free allowance

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Is rental income taxed?

Yes. Rental income in the UK is treated as personal income and may be subject to income tax reporting requirements. Depending on your overall income in the UK you might have to pay tax on the money you make from renting out your home.

The first 1,000 GBP from property income you make annually is tax free. If you earn more than 2,500 GBP annually you need to report this to HMRC through self assessment channels and may need to pay tax on the income at prevailing income tax rates.

Some people earning up to 12,570 GBP annually do not need to pay income tax in the UK. After this you’ll pay a basic tax rate of 20% up to an income of 50,270 GBP, and rates of 40% to 45% above this.

First vs second home: tax implications

In England and Northern Ireland there are additional stamp duty taxes for non-residents and people buying a second (or subsequent) property:

• Non-resident additional stamp duty – 2% on top of SDLT basic rate
• Second home additional stamp duty – 5% on top of SDLT basic rate

These costs are on top of the standard stamp duty which varies by property value but which can be up to 12% of the property costs for high value homes.

How to save money on your property purchase

Funding your property in the UK from abroad? Why not use Wise to move money internationally for the property purchase and save on currency conversion costs?

Wise offers international transfers which are secure, quick and which use the mid-market exchange rate with low, transparent fees. You could use Wise to pay your solicitor for the sale directly, or if you’ve got a UK bank account, you can use Wise to move money between your overseas and UK accounts to pay your dues in pounds. In either case you’ll get a fair exchange rate and low costs with progressive fee discounts on high value transfers.

Wealth taxes in the UK

There’s no specific wealth tax in the UK – but property owners may be concerned about inheritance taxes in the event they die and their assets pass to a loved one.

The UK government imposes inheritance tax if the value of the deceased’s estate including a property is 500,000 GBP or more. There are a couple of other qualifying features to have this tax threshold – you must be leaving your assets to children or grandchildren, and your entire estate must be valued at 2 million GBP or less. If you do not meet these criteria you’ll find inheritance tax is due on all assets above 325,000 GBP in value.

If you’re wondering how to avoid inheritance tax on a property in the UK it may be worth taking professional advice. You could give away your home as long as you move out and stay alive for 7 years following the transfer of the property. Or you may continue to live in the property if you meet other criteria including paying market value rent.

How to pay your taxes

Generally if you need to pay property taxes in the UK when buying or selling a home, you’ll have the help of a solicitor who will settle your dues for you as part of their service.

If you’re receiving rent in the UK you’ll need to pay HMRC using the self assessment system. You can pay your HMRC self assessment online using various different payment methods. Self assessment filing and payments happen annually.

Finally, for council taxes you’ll need to talk to your local council wherever their property is located. Councils usually accept repeat and one off payment methods such as direct debits and bank transfers. Costs are normally paid monthly.

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When to speak to a tax professional

It can help to speak to a tax professional when buying or selling a house in the UK, to make sure you’ve covered all your duties regarding taxes – and to make sure you’ve taken advantage of any deductions or benefits you may be eligible for. Getting tax advice might cost you – but it’ll give you peace of mind and it may even mean you can reduce your overall liabilities in the end.

Useful resources (Checked on 26th January 2026)

• UK government – buying a home in the UK
• UK government – Stamp Duty Land Tax
• Scottish government – Land and Buildings Transaction Tax
• Welsh government – Land Transaction Tax
• UK government – Calculate Stamp Duty Land Tax (SDLT)
• UK government – Tax when you sell a property
• UK government – Capital gains Tax
• UK government – Council Tax
• HMRC – tax on rental income
• UK government – inheritance tax