Whether you let a single flat, manage holiday cottages or run a company portfolio, UK property taxation now affects every stage of the property life cycle – purchase, letting, refinancing and sale. The 2025/26 tax year looks superficially familiar because headline rates are unchanged, yet the real tax take is climbing.
The annual tax-free capital-gains allowance is permanently fixed at just £3,000, the temporary stamp duty land tax (SDLT) concession has expired and personal allowances remain frozen. Costs are rising too: average private rents are 7.7 % higher than a year ago, and the median home in England still costs 7.7 times full-time earnings, according to the Office for National Statistics (ONS). Against this backdrop, keeping more of every pound you earn is not simply prudent – it is essential. In this blog, we outline the 2025/26 rules that matter, show where the traps lie, and highlight straightforward steps that can improve your cashflow today.
Taxing rental income
Rental profits are subject to income tax. The personal allowance is still £12,570, and the basic-rate band ends at £37,700, both frozen until April 2026. Profits above these thresholds attract 20%, 40% or 45% tax.
- Mortgage interest: Finance-cost relief remains a 20% credit, so every £1 of interest only cuts your bill by 20p.
- Repairs and running costs: Claim them in full when they are wholly and exclusively for the rental business; capital improvements must be added to the cost base for capital gains tax (CGT) later.
- Making Tax Digital (MTD): Quarterly reporting becomes mandatory from 6 April 2026 for landlords with qualifying income over £50,000. Cloud bookkeeping now will save last-minute panics.
Tip: Where possible, spread large repair programmes over two tax years so that income stays inside the basic-rate band.
Stamp duty land tax – 2025 resets you need to see
SDLT bites at purchase in England and Northern Ireland. From 1 April 2025 the nil-rate band reverts to £125,000, and the regular 2%, 5%, 10% and 12% slices apply above that. First-time-buyer relief now stops at £300,000 (previously £425,000).
- 3% additional-property surcharge: Unchanged for second homes.
- 2% non-resident surcharge: Still applies to overseas buyers.
- Higher-rate corporate charge: Certain companies pay 17% on dwellings over £500,000.
- Multiple dwellings relief: Abolished on 1 June 2024, so portfolio buyers will see higher bills.
Planning checkpoint: Review purchase structures before exchange; SDLT planning is almost impossible once contracts are legally binding.
Useful resource: SDLT rates – HMRC.
Capital gains tax on property disposals
CGT now applies at 18% for basic rate and 24% for higher- or additional-rate taxpayers on residential and non-residential gains alike. The annual exempt amount is permanently fixed at £3,000 from 2024/25 onwards.
- 60-day reporting: UK residents must file and pay within 60 days of completion.
- Spousal transfers: Still exempt and can double the annual allowance.
- Loss harvesting: Realise share or crypto losses to offset property gains.
- Timing trick: Sell on 6 April instead of 5 April to push the CGT payment a full tax year ahead.
Corporate and non-resident considerations
- Property companies: Profits over £250,000 attract 25% corporation tax; those under £50,000 pay 19%.
- Annual tax on enveloped dwellings (ATED): This still applies to companies holding UK residential property worth over £500,000.
- Non-resident landlords: They can receive rents gross under the HMRC scheme but must settle tax via self assessment each January.
- VAT on short-term lets: The registration threshold is £90,000; many holiday-let owners will now be within scope.
Practical planning tips for UK property taxation in 2025/26
- Choose the right ownership structure: Individual, partnership or company – each time you add to your portfolio.
- Digitise every receipt: HMRC accepts scanned copies and MTD software will import them automatically.
- Explore furnished holiday letting (FHL) status: It still offers capital allowances and CGT roll-over relief if occupancy tests are met.
- Refinance with purpose: Interest relief is restricted, yet capital repayments build equity you can use later without income tax.
- Keep an eye on CGT triggers: Gifts, emigration and divorce can all crystallise gains.
- Align personal goals: Selling one asset before buying the next can avoid the 3% surcharge if you complete within three years.
- Talk to an adviser early: We can model SDLT, CGT and income scenarios before you commit.
For tailored guidance, visit our property specialists or get in touch.
We’ll guide you every step of the way
Tax seldom grabs headlines, yet it quietly determines whether a property produces a healthy yield or a disappointing return. A frozen personal allowance, smaller CGT exemption and tighter SDLT bands mean accidental landlords and seasoned investors alike are paying more. The good news is that every allowance, relief and election is also an opportunity. We help clients buy at the right time, claim every deductible expense and structure exits to keep gains in their pockets.
Ready to review your portfolio or sense-check an upcoming deal? Contact us to discuss your UK property taxation position today – we will make tax work for you, not against you.
