6 Different Property Taxes
When getting involved in the property market there are many different taxes to consider.
- Stamp Duty Land Tax
You pay Stamp Duty Land Tax when you:
- Buy a freehold property
- Buy a new or existing leasehold
- Buy a property through a shared ownership scheme
- Are transferred land or property in exchange for payment.
The amount of tax you will have to pay varies on the price and type of the property and location.
2) Inheritance Tax
When property is passed down, Inheritance Tax needs to be considered. The Inheritance Tax threshold is currently £325,000 and depending on your circumstances, your estate must be worth more than that for it to be taxed.
3) Capital Gains Tax
Second homes and holiday homes may be subject to Capital Gains Tax when sold. The amount of tax you pay depends on your overall income. From 6th April 2020 new rules determined that any Capital Gains Tax due, must be paid within 30 days of residential property sale and a relevant return submitted to HMRC.
4) VAT
Although VAT isn’t generally payable on purchases of residential property, home improvements are mostly subject to VAT but, lower rates of VAT can be incurred in certain circumstances.
5) Income Tax
If you are a landlord, or you rent out multiple properties you will have to pay income tax on any rental profits.
Depending on your other income however, your personal tax allowances will still ensure that not all of your income is taxed.
6) Corporation Tax
UK Property businesses are chargeable to UK Corporation Tax on any profits made. It is calculated and paid annually based on your ‘Corporation Tax accounting period’ which is usually the same as your company’s financial year.
It is possible to reduce all these types of tax with the help of a tax specialist. The whole area of property tax is quite complicated, but with a professional advisor you could save money in the long run. We have a dedicated team of specialists who can help you with any queries.
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