Advice on taxes for UK landlords: The complete guide for 2021/22

Coronavirus: Everything landlords need to know - guide link

This information is current and updated to the best of our knowledge as of April 2021.

We are in the middle of an unprecedented health crisis, which is also impacting business and personal finances nationwide. In the lead up to the 2021 Budget, many were expecting Chancellor Rishi Sunak to implement significant tax changes, in order to recoup some of the billions of pounds that have been spent on the UK’s handling of the COVID-19 pandemic.

While some of these changes materialised, others, as we’ll come on to explain, never happened. In this guide, we provide you with a comprehensive rundown of the changes and emergency measures that have been implemented in this most recent Budget, as well as existing and continuing taxation information. See our Coronavirus guide for up-to-date information, and ensure you communicate any changes to your financial situation to HMRC. 

Property taxes can be a complicated business, especially for new landlords. In the flurry of activity around getting your property ready to rent, choosing a tenant and planning what you’ll do with your anticipated new income, it’s all too easy to forget about tax.

Getting on top of capital gains tax, stamp duty, corporation tax, expenses and all the other things landlords have to think about can be a minefield. That’s where this guide comes in. As much as is humanly possible, we’ll tell you what you need to know and do about the taxes you’ll pay as a landlord and how to ensure you’re paying your fair share. We’ll clarify the key terms, and give you the most up-to-date info about all things tax for 2021/22.

We can’t guarantee edge-of-your-seat thrills and spills, it’s tax, after all. But we will touch on the most crucial things you need to know for the coming year and beyond. In this guide we’ll address:

  1. What taxes do landlords pay?
  2. Tax effective property ownership
  3. Property expenses – what you can and can’t claim
  4. Extra tax savings for married couples
  5. New tax changes for buy to let landlords in 2021

Bear in mind, this guide is meant as a general overview of the current tax landscape. For further, more in-depth personal tax advice tailored to your specific requirements and circumstances, make sure you seek professional advice from a tax specialist.

1. What taxes do landlords pay?

Let’s begin by looking at what property taxes exist, and when they have to be paid.

There are three key moments to think about in the property tax lifecycle.

You pay tax when you buy a property, every year you let the property, and later when you sell it.

 Taxes for UK Landlords: The Complete Guide for 2019/20

When you buy property - stamp duty

If you buy a property over a certain price in the UK, you are eligible to pay tax.

The exact tax you pay and the specific value of the property that triggers it will be different depending on your location and circumstances; you should always seek professional advice for personal tax-related queries. Learn more about stamp duty.

Extension to the stamp duty holiday

The Chancellor announced in the 3 March Budget that the stamp duty holiday in England would be extended until the end of June 2021. Until that time the stamp duty holiday will apply to the first £500,000 of a home’s purchase price. 

Between the end of June and the end of September 2021, it will apply to the first £250,000, before returning to the regular cut-off of £125,000 at the beginning of October 2021.

Landlords hoping to expand their property portfolios in the coming months could save thousands of pounds, although property investors will still have to pay the three per cent stamp duty surcharge on second homes and buy to let properties (further details below).

Stamp duty rates for regular buyers (not second home or buy to let property buyers) until the end of June 2021 are as follows (the data in these tables comes from HMRC):