What landlords needs to know about Stamp Duty and taxes

If you're a new landlord or you are considering purchasing a property to let out, it's important to be aware of the costs of buying, selling, and letting a property that's not your primary residence, to get a true understanding of its profitability. In particular, that includes Stamp Duty as well as taxes owed on any income. In this article we give you a quick guide to the taxes you need to be aware of and when you need to pay them.

Which taxes do landlords pay?

There are three main areas of tax that landlords need to be aware of: Stamp Duty Land Tax, Capital Gains Tax, and Income Tax, all of which apply at different stages of property ownership.

Stamp Duty Land Tax

Stamp Duty Land Tax, most commonly referred to simply as Stamp Duty, is the tax that you pay when you buy a property or land in England and Northern Ireland. It is paid by the buyer/ new owner of the property, and it's owed to HMRC within 14 days of the purchase. Usually the solicitor you use for the property purchase will collect the Stamp Duty payment from you and pay the money to HMRC on your behalf.

The Stamp Duty rates vary according to the value of the property, as well as whether or not it's your primary residence or an additional property. Typically, it is applied as an additional 3% on top of the standard Stamp Duty rates. That means that as of June 2025 the Stamp Duty rates for additional properties are:

● Properties of a value up to £250,000: 3%

● Properties of a value from £250,001 to £925,000: 8%

● Properties of a value from £925,001 to £1.5 million: 13%

● Properties of a value above £1.5 million: 15%

Capital Gains Tax

You pay Capital Gains Tax when you sell a property that’s not your primary residence. This is the tax based on any profits you make in the period since you bought it (the capital gain). You do not currently pay Capital Gains Tax on a primary residence, but on additional properties it is set at 28% for higher rate taxpayers and 18% for basic rate taxpayers. Unlike Stamp Duty, your solicitor does not file your Capital Gains Tax bill - you need to make sure it is filed within 14 days of the sale.

However, there are certain fees you can deduct from the capital gain. These include:

● Solicitor and estate agent fees

● Cost of improvements (not maintenance)

● Private Residence Relief (a partial deduction if you lived in the property)

Income Tax

Whether you own one letting property or several, landlords need to pay income tax on net rental profits (rental income minus allowable expenses). The first £1,000 of your income from property rental is tax-free as part of your 'property allowance, and you must report it on a Self Assessment tax return if it's more than £2,500 after allowable expenses or £10,000 before allowable expenses.

If you own a property jointly with a spouse, you will usually be taxed in equal shares, and if you own it with someone who is not a spouse then your share of the rental profits or losses will usually be based on the share of the property you own, unless you agree to a different allocation.

In terms of expenses, although you can no longer deduct mortgage interest from rental income, you do get a 20% tax credit on your interest payments. Allowable expenses include:

● Letting agent fees

● Property maintenance and repairs

● Council Tax (if you pay it)

● Landlord insurance

● Accountant fees

● Utilities (if you cover them)

Keeping tax records

In any case it's important for landlords to keep records of their income and expenses from rental properties for their Self Assessment tax return.

However, as of 6th April 2026, landlords (and sole traders) earning more than £50,000 from property income will need to submit their income and expenses to HMRC every quarter as part of the government's Making Tax Digital for Income Tax initiative. This is in addition to the usual annual self-assessment tax return. The scheme will be extended in April 2027 to also include those with a gross income between £30,000 and £50,000.

To ensure you are compliant, landlords will need to keep digital records of all income and expenses from rental properties using HMRC-approved software to document and submit information.

How Chestertons can help

Chestertons is the premier London lettings and estate agency with more than 200 years’ experience in the property market and a team of experts offering a range of services that not only include buying, selling, and letting property, but span consultancy and research, asset valuation, financial support and more. For anything we don’t offer in-house, such as mortgage advice or conveyancing support, we can connect you with one of our trusted partners. If you would like to find out more about working with Chestertons, including how they can help you make the most of your rental property, contact your local letting agent at any time.

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