Taxes at acquisition — Stamp Duty Land Tax (SDLT)

SDLT applies once the purchase price exceeds £125,000 for residential property (£300,000 for first-time buyers on properties up to £500,000) or £150,000 for non-residential property. Residential rates for individuals run from 0% up to £125,000 to 12% above £1.5 million, with a further 5% surcharge for owners of a second residential property. Non-UK residents (present in the UK for fewer than 183 days in the preceding 12 months) pay an additional 2% surcharge, reclaimable if UK residence is acquired within six months. Corporate bodies face a 5% surcharge on top of the standard bands, and a flat 17% rate can apply to residential properties over £500,000 (subject to reliefs, notably for property rental businesses).

Ongoing income and gains — individuals

Rental profits are taxed at the individual's marginal income tax rate — currently 20% / 40% / 47%, rising to 22% / 42% / 47% from 6 April 2027. Capital gains on disposal are taxed at 18% (basic rate) or 24% (higher rate) after a £3,000 annual exempt amount, reportable and payable within 60 days of completion. Non-residents disposing of UK property — residential since 2015 and commercial since 2019 — remain within the charge, with rebasing relief available for pre-April 2019 ownership. Disposals of interests in "UK property rich" entities (75% or more of gross asset value derived from UK land) are also caught, whether held by individuals or through corporate/collective structures.

Ongoing income and gains — companies

UK companies pay corporation tax on net rental profits at 19% (profits up to £50k), 25% (above £250k) or a marginal rate in between, with relief available for mortgage interest; the same rates apply to capital gains on sale, and there is no personal allowance. Non-resident corporate landlords are subject to 20% withholding at source on net rental income (payable quarterly), or may apply for the Non-Resident Landlord scheme to receive rent gross, but face the 25% main corporation tax rate on profits. Private use of a corporately-owned property by an employee, officer or shareholder triggers a P11D benefit-in-kind charge (income tax plus 15% Class 1A NIC for the employer), soon to be reported increasingly through payroll.

Annual and one-off property taxes

Companies owning UK residential property worth over £500,000 must file an Annual Tax on Enveloped Dwellings (ATED) return; charges for 2026/27 range from £4,600 (£500k–£1m) to £303,450 (over £20m), with relief available where the property is let commercially. Individuals face Inheritance Tax at 40% above the £325,000 nil-rate band (plus a £175,000 residence nil-rate band, tapered above £2m of net estate), extending to UK situs assets — including property-rich company interests — even for non-UK residents, closing the historic offshore-holding-company route. From April 2028, residential properties worth over £2 million will additionally attract the new High Value Council Tax Surcharge ("mansion tax") of £2,500–£7,500 per year, payable by owners rather than occupiers. A wider annual wealth tax on assets above roughly £10 million has also been proposed but not yet enacted. Council tax and business rates apply to residential and commercial occupiers respectively.

Conclusion

The UK tax treatment of property investment is multi-layered and depends heavily on whether the owner is an individual or a company, UK resident or non-resident, and on the intended use of the property. Beyond taxation, prospective buyers should also factor in jurisdiction-specific legal requirements (which differ in Scotland and Wales) and other costs such as legal fees, mortgage arrangement costs and insurance.

Short presentation of Maria Udroiu and Catherine Wan

Maria Udroiu and Catherine Wan are Tax Managers at Bourner Bullock, presenting on the UK tax implications of acquiring and holding property in England and Northern Ireland.

Website : https://www.bournerbullock.co.uk