Being a landlord is not one tax, it is four or five, each with its own rules, rates and deadlines. You pay stamp duty when you buy, income tax on the rent every year, capital gains tax when you sell, and a different set of rules again if you hold the property through a company. Miss one and it tends to arrive as a surprise, usually with a penalty attached.
This guide is the map. It walks through each tax a buy-to-let landlord meets, in the order you meet them, so you can see how they fit together. Where a topic deserves its own deep dive we have written one, and where a calculation is easier done than described we have built a tool. Both are linked as we go. HMRC's own overview of the rules is renting out a property: paying tax.
Income tax on your rental profit
The bread-and-butter tax. Your rental profit, broadly rent received minus allowable running costs, is added to your other income and taxed at your marginal rate: 20% in the basic-rate band, 40% in the higher-rate band and 45% at the top. There is no separate "landlord rate", so the same rent costs a higher-rate taxpayer twice what it costs a basic-rate one.
The catch that reshaped buy-to-let is Section 24. Since April 2020 you can no longer deduct mortgage interest as an expense. Instead you get a tax credit worth 20% of the interest. For a basic-rate taxpayer this changes little. For a higher-rate landlord it is a real cost: you are taxed on rent you have used to pay the bank, and only get a fifth of the interest back. On a heavily mortgaged property it can push the effective rate on profit well above 40%, and in some cases tip you into the higher band in the first place.
If you own with a mortgage, this is the number that decides whether the property still works. We break the mechanics down in Section 24 explained, and you can see it on your own figures with the Section 24 tax calculator. For the wider income-tax bill, including how the rent stacks on top of a salary, use the rental income tax calculator.
Stamp duty when you buy
Stamp Duty Land Tax (SDLT) is the one-off tax on the purchase price, paid within 14 days of completion in England and Northern Ireland. It is charged in slices: 0% up to £125,000, then 2%, 5%, 10% and 12% on the parts above. So you only pay the higher percentage on the portion of the price that lands in each band, not on the whole thing.
Buy-to-let and second homes carry a surcharge. When you complete on an additional residential property, and are not replacing your main home, you pay an extra 5% on top of every band. That surcharge alone adds £15,000 to a £300,000 purchase, and it is the single biggest entry cost most landlords face. A limited company pays these higher rates on any residential purchase, regardless of how many properties it already owns.
If you are new to the tax, start with what is Stamp Duty Land Tax. For the current tables and worked examples see the 2026 SDLT rates and thresholds, and for the surcharge specifically, the buy-to-let stamp duty surcharge explained. To price your own deal, the stamp duty calculator does the banded sum for you.
Capital gains tax when you sell
When you sell a rental for more than you paid, the profit is a capital gain, taxed separately from income. Residential property has its own CGT rates: 18% on any part of the gain that falls within your unused basic-rate band, and 24% on the rest. Everyone gets an annual exempt amount, the slice of gains that is tax-free each year, which is £3,000 for 2025-26.
Two points catch people out. First, if the property was ever your only or main home, Private Residence Relief exempts a proportion of the gain, plus the final nine months of ownership. That can shave thousands off the bill, and it is worth checking before you assume the whole gain is taxable. Second, the deadline: when CGT is due on a UK residential sale you must report it and pay within 60 days of completion, not at the next Self Assessment. Miss that and there is an automatic penalty.
The full walk-through, with a worked example and the 60-day clock, is in capital gains tax when you sell a buy-to-let, and the relief for a former home is covered in private residence relief and letting relief explained. HMRC's summary is at tax when you sell property, and you can estimate your own bill with the CGT calculator.
Personal name or limited company
Section 24 sent a lot of landlords looking at limited companies, because a company is not caught by the mortgage-interest restriction. It deducts interest in full and pays corporation tax on what is left. The rates: 19% on profits up to £50,000 (the small profits rate), 25% on profits over £250,000 (the main rate), and a tapered charge in between produced by Marginal Relief. HMRC's rates are published at corporation tax rates.
The wrinkle is getting the money out. Corporation tax is only the first layer. When you take profit from the company as dividends you pay dividend tax personally on top, so the total tax on money you actually spend can be close to holding personally once both layers are counted. A company tends to win where you are a higher-rate taxpayer, borrow heavily, and reinvest rather than draw the profit out. It tends to lose on a small, lightly-mortgaged portfolio where the extra running costs and the second tax layer outweigh the saving.
There is no universal answer, only your answer. We model it property by property in limited company vs personal buy-to-let, dig into what a company really pays in SPV corporation tax on buy-to-let, and cover the extraction problem in taking profit out of a property company. The limited company vs personal calculator runs both routes on your figures.
Allowable expenses versus capital improvements
Underneath the income-tax bill sits a question that decides how much profit there is to tax at all: which costs can you deduct? The rule of thumb is that revenue costs, the day-to-day expense of running and maintaining the property, come off your rental income now. Capital costs, money spent improving the property or on the purchase itself, do not; they go into your CGT calculation instead, to be set against the gain when you eventually sell.
The line between the two matters. Replacing a broken boiler with a similar one is a repair and deductible now. Adding an extension or a first kitchen is an improvement and is not. Getting the split right is worth real money, and unlike in the US there is no depreciation allowance to fall back on. The full UK-only checklist is in allowable expenses for landlords.
Making Tax Digital for Income Tax
How you report all of this is changing. Making Tax Digital for Income Tax (MTD for Income Tax) replaces the annual Self Assessment return with digital record-keeping and quarterly updates sent to HMRC through compatible software, plus a final declaration after year end.
It arrives in phases, based on your qualifying income (broadly your gross rent plus any self-employment turnover, before expenses):
- From April 2026, if your qualifying income is over £50,000
- From April 2027, if it is over £30,000
- From April 2028, if it is over £20,000
So a landlord with gross rents of, say, £55,000 is in from the first wave in April 2026, even if the actual profit after mortgage interest is modest. The threshold is on income, not profit, which is the point most people get wrong. HMRC's guidance is using Making Tax Digital for Income Tax, and we cover who is caught and when in Making Tax Digital for landlords.
Which of these applies to you
Not every tax hits at once, so a quick sort:
- Buying now? Stamp duty and its 5% surcharge are your immediate cost. Price it before you offer.
- Already letting? Income tax and Section 24 decide your yearly return, and allowable expenses decide how big the bill is.
- Thinking of a company? Weigh corporation tax plus dividend tax against Section 24 on your own numbers, not a headline.
- Selling? Capital gains tax at 18% or 24%, any Private Residence Relief, and the 60-day deadline.
- Over £50,000 in rents? Making Tax Digital lands in April 2026, so get your records digital sooner rather than later.
Buy-to-let tax is not one bill but a sequence of them, and each is predictable once you know it is coming. Work out which stage you are at, read the deep dive for it, and run your own figures through the relevant tool before you commit.
This is general information, not tax or financial advice. The rules interact with your wider income and circumstances, so check the current GOV.UK guidance or speak to an accountant before you act.
