29. May 2026

How Much Tax Do Landlords Pay? (UK Landlord Tax Guide 2026)

If you rent out property in the UK, you may need to pay tax on the income you earn as a landlord.

Many first-time landlords are surprised to learn that rental income, profits, and even property sales can all be taxed.

This guide explains the main taxes landlords pay in the UK in 2026 and what you need to know before renting out a property.

1. Income Tax on Rental Income

Landlords pay income tax on rental profits.

This is calculated by:

Rental income received
minus
Allowable expenses

Examples of allowable expenses include:

Letting agent fees
Repairs and maintenance
Landlord insurance
Accountant fees
Mortgage interest tax relief (limited rules apply)

Your tax rate depends on your total income.

Typical UK income tax bands:

Basic rate: 20%
Higher rate: 40%
Additional rate: 45%

2. Capital Gains Tax (CGT)

If you sell a rental property for a profit, you may need to pay Capital Gains Tax.

This applies to:

Buy-to-let properties
Second homes
Investment properties

The amount depends on:

Profit made from the sale
Your income tax band
Allowable deductions and reliefs

3. Stamp Duty on Buy-to-Let Properties

Landlords usually pay higher Stamp Duty rates when buying additional properties.

This is known as the:

Additional property surcharge

Rates vary depending on property value and current government rules.

4. Council Tax and Other Costs

Landlords may also be responsible for:

Council tax during empty periods
Service charges (for flats)
Ground rent
Licensing fees in some areas

Always check local council rules.

5. Should You Use a Limited Company?

Some landlords buy property through a limited company for tax reasons.

Potential benefits may include:

Different mortgage interest treatment
Corporation tax structure
Portfolio growth strategies

However:

Mortgage rates can differ
Accounting may be more complex
Professional advice is recommended

6. Keep Proper Records

Good record keeping is essential.

Landlords should keep:

Rental income records
Expense receipts
Safety certificates
Mortgage statements
Tax returns

This helps with:

HMRC compliance
Accurate tax reporting
Reducing accounting stress

Simple Summary

UK landlords may need to pay:

Income tax on rental profits
Capital Gains Tax when selling
Stamp Duty on additional properties
Other property-related costs

The exact amount depends on:

Your income
Property profits
Ownership structure
Tax reliefs available

Professional tax advice is often worthwhile for landlords.

Useful UK Links

HMRC Property Income Guidance
UK Government Capital Gains Tax Guide
HMRC Buy-to-Let Tax Information
MoneyHelper Buy-to-Let Tax Guide
NRLA Tax Resources for Landlords