At a glance
- Buying a property you will let out means paying the higher rates of Stamp Duty: 5 percentage points on top of the standard rates on every band, for purchases of £40,000 or more when you will own another home.[1]
- Rental profit is taxed as income. Mortgage interest is not deducted from your profit; instead you get a tax reduction at the basic rate (20% now, 22% from April 2027).[2][3]
- From 6 April 2027 property income gets its own tax rates of 22%, 42% and 47%, now written into the Finance Act 2026 (England, Wales and Northern Ireland).[4]
- Landlords with qualifying income over £50,000 must use Making Tax Digital for Income Tax from 6 April 2026, over £30,000 from April 2027 and over £20,000 from April 2028.[5]
- Selling later may mean Capital Gains Tax, which must be reported and paid within 60 days of completion.[6]
Rules and figures last checked October 2026.
Is buy to let for you?
Letting a property is a business as well as an investment: you take on legal duties, running costs, periods without a tenant and a tax return. This guide sets out the costs and the tax so you can plan with open eyes. It is general information, not financial, tax or legal advice, so speak to a regulated mortgage adviser and an accountant before you commit.
Before you buy, it is worth finding out what a similar property would really let for. We offer a free rental valuation for properties you already own, and our team can talk through realistic rents for a property you are thinking of buying. Browse what is on the market in London and Hertfordshire, or read our area guides for the neighbourhoods we cover.
The cost of buying
Stamp Duty Land Tax (SDLT) is usually the largest cost on top of the price and the deposit. Buying a property when you will own another one brings a surcharge.
| Slice of the price | Higher rate |
|---|---|
| Up to £125,000 | 5% |
| £125,001 to £250,000 | 7% |
| £250,001 to £925,000 | 10% |
| £925,001 to £1.5 million | 15% |
| Above £1.5 million | 17% |
These apply to a residential property worth £40,000 or more when you will own another one, and each rate is charged only on the part of the price within that slice.[1] They are the standard rates (0%, 2%, 5%, 10% and 12%)[7] with 5 percentage points added to every band. The surcharge was raised from 3 to 5 percentage points for purchases with an effective date on or after 31 October 2024.[8]
Financing a let property
A buy-to-let mortgage is a different product from a residential mortgage. The Financial Conduct Authority does not regulate most buy-to-let mortgages, but it does supervise “consumer buy-to-let” mortgages, which are for people who are not borrowing mainly for business purposes, such as an “accidental landlord” who has moved out of their own home and kept it to let.[10]
Lenders set their own deposit and rent requirements, so speak to a mortgage adviser early. We do not give mortgage advice.
Tax on the rent
Rental profit counts as income. You can deduct the costs of running the property, such as repairs and maintenance, letting and management fees, accountancy fees, council tax, utilities and landlord insurance (buildings, contents and public liability).[11]
- Property allowance. You can instead claim up to £1,000 a year of tax-free property income. If you do, you cannot also deduct your expenses.[11]
- Mortgage interest. Relief on residential finance costs is restricted to the basic rate. You do not deduct the interest from your profit; you get a reduction in your tax bill worth the basic rate (20% now) of the lowest of your finance costs, your property profits or your income above the personal allowance.[2] From the 2027 to 2028 tax year the relief is calculated at the new property basic rate, 22%.[3]
- Self Assessment. You must report rental income on a tax return if it is more than £2,500 after expenses or more than £10,000 before expenses. If you do not normally file a return, tell HMRC by 5 October after the end of the tax year.[12][11]
| Qualifying income in the tax year | Threshold | Must use it from |
|---|---|---|
| 2024 to 2025 | Over £50,000 | 6 April 2026 |
| 2025 to 2026 | Over £30,000 | 6 April 2027 |
| 2026 to 2027 | Over £20,000 | 6 April 2028 |
Qualifying income means your total income from self-employment and property, measured before expenses.[14] HMRC writes to people who have to start.[5] An accountant can tell you whether and when it applies to you.
Selling later: Capital Gains Tax
If you sell a let property for more than it cost, the gain may be taxable. The rates are 18% on gains that fall within your basic rate band and 24% above it, and higher and additional rate taxpayers pay 24%. The tax-free annual exempt amount is £3,000.[15][16]
Once you own it
- 1
Check whether it needs a licence
Some areas of Enfield, Haringey and Waltham Forest need one even for a single household. See our licensing guide.
- 2
Get it legally ready to let
Safety certificates, alarms, an EPC and deposit protection. The list is in our landlord legislation guide.
- 3
Understand the tenancy rules
The Renters’ Rights Act changed how tenancies end and how rent rises since 1 May 2026.
- 4
Protect your income
See protecting your rental income for insurance and referencing.
- 5
Choose how involved you want to be
Compare Let Only, Rent Collection and Full Management, or start with a free rental valuation.
Sources
Every figure and rule above comes from one of these, read in October 2026. The dates are the ones each publisher shows as when the page was last updated.
- [1]Higher rates of Stamp Duty Land Tax (opens in a new tab)GOV.UK · page updated 1 April 2025
- [2]Changes to tax relief for residential landlords: how it’s worked out (opens in a new tab)GOV.UK (HM Revenue and Customs) · page updated 6 April 2017
- [3]Change to tax rates for property, savings and dividend income: technical note (opens in a new tab)GOV.UK (HM Revenue and Customs) · page updated 26 November 2025 (published)
- [4]Finance Act 2026, section 7: property rates of income tax for tax year 2027-28 (opens in a new tab)legislation.gov.uk
- [5]Find out if and when you need to use Making Tax Digital for Income Tax (opens in a new tab)GOV.UK (HM Revenue and Customs) · page updated 26 March 2026
- [6]Report and pay your Capital Gains Tax: if you sold a property in the UK (opens in a new tab)GOV.UK (HM Revenue and Customs)
- [7]Stamp Duty Land Tax: residential property rates (opens in a new tab)GOV.UK
- [8]Stamp Duty Land Tax: increase to the higher rates on additional dwellings and to the single rate of tax on purchases by non-natural persons (opens in a new tab)GOV.UK (HM Revenue and Customs) · page updated 30 October 2024 (published)
- [9]Renting out your property: landlord responsibilities (opens in a new tab)GOV.UK
- [10]How to check a firm or individual is authorised (opens in a new tab)Financial Conduct Authority · page updated 22 September 2026
- [11]Work out your rental income when you let property (opens in a new tab)GOV.UK (HM Revenue and Customs) · page updated 19 March 2025
- [12]Renting out your property: paying tax and National Insurance (opens in a new tab)GOV.UK
- [13]Income Tax: changes to tax rates for property, savings and dividend income (opens in a new tab)GOV.UK (HM Revenue and Customs) · page updated 27 November 2025 (published)
- [14]Sign up your business for Making Tax Digital for Income Tax (opens in a new tab)GOV.UK (HM Revenue and Customs) · page updated 13 October 2026
- [15]Capital Gains Tax: rates and allowances (opens in a new tab)GOV.UK
- [16]Capital Gains Tax: allowances (opens in a new tab)GOV.UK
This is general information about tax and costs in England, not financial, tax or legal advice. Tax rules change, and your own circumstances decide what applies to you, so speak to a regulated mortgage adviser and an accountant before you act.