As a landlord, there are a number of taxes to be aware of when purchasing, transferring or disposing of (selling) a property.
It's important to get professional tax advice on this before making any decisions about purchasing your buy-to-let (BTL) or transferring it to a limited company. Many landlords use an accountant. It's an additional cost, but they can often help you reduce the tax you need to pay, saving you money in the long run. Ideally you want someone who is a specialist in property tax and has experience advising landlords just like you.
Stamp Duty Land Tax (SDLT)
SDLT is the tax you pay when you buy a property. There is a standard calculation when you buy your main home, which goes up the more expensive it is. The same applies when buying additional properties, but includes an additional 5% rise. You need to pay this supplement whether it's a second home, a new home if planning to rent out your current one (known as 'let to buy'), or a BTL purchase, even if you're living in rented accommodation yourself. You can't avoid the 5% by saying you own one property and having your spouse buy the second in their name as you and your spouse are considered to be one 'unit'.
Below is the table showing the current SDLT applicable when buying additional properties. These rates came into effect from 1st April 2025.
| Property, lease premium or transfer value | SDLT rate |
|---|---|
| Up to £125,000 | 5% |
| The next £125,000 (£125,001 to £250,000) | 7% |
| The next £675,000 (£250,001 to £925,000) | 10% |
| The next £575,000 (£925,001 to £1.5 million) | 15% |
| The remaining amount (the portion above £1.5 million) | 17% |
Income tax
You are liable to pay tax on income earned from rental property. This is income tax if it's a personal purchase, or corporation tax if you own it through a limited company. The amount depends on rental income, mortgage interest and other tax-deductible costs. You’ll still pay personal income tax if you take the money out of a limited company (so this would be in addition to paying corporation tax).
Tax relief affects your decision on this. Since April 2020, the mortgage interest only attracts tax relief at the basic rate (currently 20%), even if you are a higher or additional rate tax payer. This means that whilst you may be paying tax at 40% on rental income, any mortgage interest relief is applied at the lower 20% rate.
Corporation Tax
If your property is owned through a limited company, your profits will be subject to Corporation Tax.
Capital Gains Tax (CGT)
When you sell a property, you'll need to pay CGT on any profit you’ve made. There is a CGT tax-free allowance of £3,000 in the 2025/26 tax year which means you’ll only pay CGT on gains over £3,000.
Inheritance Tax
Buy-to-let properties owned in your personal name would be included in your estate and may be subject to inheritance tax. This can work differently in a limited company structure which is why it's important to take tax advice.
Whether you’re exploring your first buy-to-let or considering adding to or restructuring your portfolio, we can help. Take a look at the best rates currently available for your buy-to-let in your personal name and through a limited company.
Book an appointment today to talk to one of our advisers.
