Guide to UK Property Taxes: 2025 Edition

UK property taxation has entered another major adjustment phase in 2025, with new thresholds, surcharges, and structural reforms taking effect.

This guide outlines the key taxes affecting property owners and investors — including Stamp Duty (SDLT), Income Tax on rent, Capital Gains Tax (CGT), Inheritance Tax (IHT), ATED, and local levies such as Council Tax and Business Rates.

It summarises the latest 2024–2025 changes and explains how these impact individuals, companies, and non-residents, helping you plan purchases, ownership, and disposals more effectively in a rapidly evolving tax landscape.

Buying: Transaction Taxes

Every UK property purchase triggers a one-off transaction tax, varying by region. England and Northern Ireland apply Stamp Duty Land Tax (SDLT), Scotland uses Land and Buildings Transaction Tax (LBTT), and Wales levies Land Transaction Tax (LTT).

Rates depend on price, buyer type, and property use. From 2024–2025, key reforms include the SDLT surcharge rising to 5%, Multiple Dwellings Relief abolished, and higher additional-home charges in Scotland (8%) and Wales (+1%). First-time buyer reliefs have tightened across all jurisdictions.

The tables below outline current rates and surcharges effective from April 2025 for residential purchases in each region.

England & Northern Ireland — Stamp Duty Land Tax (SDLT)

Category	Details	Effective Date
Main residence rates	0% to £125k; 2% (£125k–£250k); 5% (£250k–£925k); 10% (£925k–£1.5m); 12% (over £1.5m). Nil-rate band reverted to £125k (was £250k).	1 Apr 2025
First-time buyer relief	0% to £300k; 5% on £300k–£500k (no relief >£500k). Previous relief £425k/£625k ended.	1 Apr 2025
Additional dwellings surcharge	+5% on each band (replacing +3%)	31 Oct 2024
Non-UK resident surcharge	+2% on top of standard or higher rates	Ongoing
Multiple Dwellings Relief (MDR)	Abolished (with limited transitional rules)	1 Jun 2024

Scotland — Land & Buildings Transaction Tax (LBTT)

Category	Details	Effective Date
Residential bands	0% to £145k; 2% (£145k–£250k); 5% (£250k–£325k); 10% (£325k–£750k); 12% (over £750k). First-time buyer 0% band to £175k.	Ongoing
Additional Dwelling Supplement (ADS)	8% of total price (up from 6%)	5 Dec 2024

Wales — Land Transaction Tax (LTT)

Category	Details	Effective Date
Main residential bands	0% to £225k; 6% (£225k–£400k); 7.5% (£400k–£750k); 10% (£750k–£1.5m); 12% (over £1.5m).	Ongoing
Higher-rate surcharge (second homes / BTL)	+1% across all higher-rate bands (≈4–5% above main rates)	11 Dec 2024

While You Own: Annual/Ongoing Taxes

Owning property in the UK comes with recurring taxes and charges that vary by ownership structure, use, and location. These obligations cover rental income, local authority levies, and special rules for corporate or high-value ownership.

The table below summarises the key ongoing taxes applicable from 2024–2026.

Tax Type	Who It Applies To	Key Rules / Rates	Effective Dates / Notes
Income Tax on Rents	Individuals	Taxed at marginal income tax rates. Mortgage interest not deductible; replaced by a 20% finance-cost credit. From 6 Apr 2024, the cash basis is default (elect out if preferred).	In force since 2020; updated Apr 2024
Corporation Tax on Rents	UK & Non-Resident Companies	Standard corporation tax rules apply. Non-resident companies brought under UK corporation tax from Apr 2020.	Ongoing
Council Tax	Owners / Occupiers of Dwellings	Annual local tax. From 1 Apr 2025, English councils may charge up to 100% premium on second homes. Empty-home premiums strengthened in 2024.	Rules vary by devolved nation
Business Rates	Commercial Property Owners / Tenants	Applies to most non-domestic premises. Current rating list effective 1 Apr 2023; next revaluation in 2026 (England & Wales).	England & Wales specific
ATED (Annual Tax on Enveloped Dwellings)	Companies / “Non-Natural Persons” owning UK residential property >£500k	Annual charge, uprated annually by CPI. See HMRC tables for 2025–26 rates.	Ongoing
VAT on Commercial Property	Landlords / Developers	Most lettings/sales exempt, but can opt to tax to recover input VAT. New commercial buildings (<3 years old) standard-rated (5%).	Ongoing

Selling: Capital Gains Tax (CGT)

When selling UK property, any profit is typically subject to Capital Gains Tax (CGT). The rate and reporting requirements depend on your tax status and ownership structure. Recent reforms lowered the higher residential CGT rate and reduced the annual exemption, tightening post-sale compliance deadlines.

Taxpayer Type	Key Rules / Rates	Reporting & Deadlines	Effective Dates / Notes
Individuals (Residential Property)	CGT at 18% (basic-rate) and 24% (higher-rate). Annual exempt amount £3,000 (previously £12,300 in 2022/23). Private Residence Relief applies to main homes.	Must report & pay within 60 days of completion on UK residential disposals.	Rates effective 6 Apr 2024
Non-Residents	CGT applies to UK land (residential & commercial) and property-rich share disposals.	Typically 60-day reporting/payment deadline via HMRC’s online system.	Extended scope since Apr 2019
Companies	Gains taxed under UK Corporation Tax rules (not CGT).	Reported through Company Tax Return (CT600).	Ongoing

Passing Wealth: Inheritance Tax (IHT)

Inheritance Tax (IHT) applies to any property located in the UK, irrespective of the owner’s domicile or residency status. Since 2017, anti-enveloping rules have ensured that UK residential property held through offshore companies is no longer shielded from IHT, closing a major avoidance route.

The UK government has announced a fundamental reform effective 6 April 2025, shifting IHT from a domicile-based to a residence-based system. Under this proposal, individuals resident in the UK for 10 of the previous 20 years will be subject to IHT on their worldwide assets, and exposure will continue for 10 years after leaving the UK (“10-year on / 10-year tail”). Final legislation and transitional measures are expected in the forthcoming Budget.

Aspect	Current System (Pre-Apr 2025)	Proposed System (From Apr 2025)	Notes
Scope	IHT based on domicile — UK-situated assets always taxable; non-doms only on UK assets.	IHT based on residence — long-term residents (10/20 years) taxed on worldwide assets.	Broadens reach of IHT to globally held wealth.
Rate	40% on estates above the £325,000 nil-rate band (plus up to £175,000 residence band).	No rate change expected.	Couples can combine allowances up to £1 million.
Company-Held Property	Anti-enveloping rules bring UK residential property held via companies into IHT.	Continues under new regime.	Prevents offshore company sheltering.
Excluded Property Trusts	Remain outside IHT if settlor non-domiciled.	Likely to lose excluded status once settlor meets residence test.	Full details pending legislation.
Transitional Period	Existing domicile rules apply until 5 Apr 2025.	Grandfathering and transition measures expected.	Confirm once Budget guidance is published.

Special Regimes & Notable 2024–2025 Changes (At a Glance)

The 2024–2025 fiscal period brought several headline changes to UK property taxation. SDLT thresholds reverted, additional property surcharges rose, and key reliefs such as Multiple Dwellings Relief (MDR) and the Furnished Holiday Lettings (FHL) regime were abolished. Meanwhile, devolved governments in Scotland and Wales adjusted their own transaction taxes, and new landlord and council tax measures came into force. Together, these reforms are reshaping the framework for UK property taxes in 2025.

Category	Change	Effective Date	Key Details / Notes
SDLT – Nil-Rate Band	Threshold reverted to £125,000 (was £250,000).	1 Apr 2025	End of temporary uplift announced in 2022 mini-budget.
SDLT – First-Time Buyer Relief	Reduced to £300k/£500k cap (from £425k/£625k).	1 Apr 2025	Aligns with reversion of main nil-rate band.
SDLT – Additional Dwellings Surcharge	Increased from +3% to +5%.	31 Oct 2024	Applies to all additional residential purchases.
SDLT – Multiple Dwellings Relief (MDR)	Abolished.	1 Jun 2024	Limited transitional provisions apply.
CGT – Residential Property	Higher rate cut to 24% (from 28%); annual exemption £3,000; 60-day filing unchanged.	6 Apr 2024	Aimed at stimulating transaction activity.
Furnished Holiday Lettings (FHL)	Regime abolished.	6 Apr 2025	Removes distinct income and CGT reliefs for holiday lets.
Scotland – ADS	Rate increased to 8% (from 6%).	5 Dec 2024	Applies to contracts signed on or after that date.
Wales – Higher-Rate LTT	+1% increase across all bands.	11 Dec 2024	Impacts second homes and buy-to-let purchases.
Council Tax (England)	Councils may apply 100% premium on second homes.	1 Apr 2025	Implementation at local authority discretion.
Landlord Rules	Cash basis default for property income; finance-cost relief capped at 20% credit.	6 Apr 2024	Affects individual landlords nationwide.

Commercial Property Quick Notes (UK-Wide)

Commercial property in the UK is taxed under a slightly different framework from residential real estate. Distinct transaction tax bands apply, while ownership and disposals carry specific VAT, business rate, and gains tax implications.

The table below summarises the key points across the property lifecycle.

Stage	Tax / Rule	Key Details	Applicable To
Buying	SDLT / LBTT / LTT (Non-Residential Rates)	Commercial transactions use separate bands with lower thresholds and different rate structures from residential property.	Applies across England, Scotland, and Wales under each respective regime.
Holding	Business Rates	Annual charge on most non-domestic properties, based on rateable value set by the VOA or devolved equivalent.	Occupiers or owners of commercial property.
	VAT – Option to Tax	Most commercial sales/leases are VAT-exempt, but landlords can opt to tax (standard rate 20%) to reclaim input VAT on costs.	Developers / landlords / investors seeking VAT recovery.
Selling	Capital Gains / Corporation Tax	Sale profits taxed under CGT for individuals or Corporation Tax for companies.	All sellers (UK and non-resident).
	Non-Resident Gains	Since Apr 2019, non-residents are fully within UK tax scope for disposals of UK commercial property and “property-rich” entities.	Non-UK individuals and companies.

Practical Tips for Investors (Especially Non-Residents) — Navigating UK Property Taxes in 2025

1. Model SDLT/LBTT/LTT early. Filing windows are short—14 days for SDLT, 30 days for Welsh LTT—and overlapping surcharges (additional-dwelling + non-resident) can quickly inflate costs.

2. Track devolved updates. Scotland’s ADS and Wales’s higher-rate LTT change independently of Westminster, so always check the latest local thresholds.

3. Plan exits carefully. With the CGT higher rate now 24% and only a £3 k exemption, sale timing and main-residence relief optimisation matter; the 60-day CGT return deadline is easily missed.

4. Choose structure strategically. Companies pay corporation tax but can deduct finance costs; individuals get only a 20 % credit. The ATED applies to company-held homes over £500 k.

5. Monitor IHT reform. The shift to a residence-based system from 6 Apr 2025—with a 10-year on/10-year tail test—may significantly affect estate and succession planning for internationally mobile owners.

Take the Next Step: Navigate UK Property Taxes with Confidence

UK property taxation is evolving fast — from shifting SDLT bands to the new residence-based IHT rules. Staying ahead requires strategy, not reaction.

Speak with a Global Investments advisor to structure your portfolio efficiently across borders. We’ll help you optimise ownership, plan exits, and align your property strategy with the latest 2025 tax reforms.

Whether you’re managing multiple assets or exploring corporate ownership options, our specialists are here to guide you. We’ll help you balance your UK and international holdings, optimise structure, and plan for lasting tax efficiency.

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