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Property taxes

Every year, foreign investors that want to move to the UK and invest in a stable economy are looking to buy a property here. And of course their main question is whether they have to pay any property tax. There are not that many taxes related to property in the UK; however, they can be of great importance when deciding on buying and investing into real estate.

Our specialists at Imperial & Legal are happy to plan your taxation in real estate deals and minimise tax burden.

If you buy a flat or a house for yourself or buy to let, or buy to gain, we can structure your deal in the most efficient way.

Below you will find main property-related taxes in the UK, and for each we can advise how to minimise the bill.

Stamp Duty Land Tax (SDLT)

A buyer must pay this tax when buying a property in the UK. Tax rates vary based on the property value and legal status of a buyer; it’s a fixed 15% for legal entities.

There are certain reliefs and exemptions from the SDLT tax. For example, you can claim relief when you buy multiple dwellings. Or, if you buy a land with a house, some types of land that can be part of your area are exempt.

You’ll usually have to pay 3% on top of the normal SDLT rates if buying an additional residential property if you already own other property anywhere in the world.

Annual Tax on Enveloped Dwellings (ATED)

ATED is an annual tax payable mainly by companies that own UK residential property. Returns must be submitted and payments must be made during April each year for the coming period from 1 April till 31 March.

The amount of the tax you’ll need to pay is worked out using a banding system based on the value of your property on the purchase date or for every 5 years after the purchase.

If a property is let, the company can claim a relief, but it needs to prepare and submit a tax return on letting proceeds.

Capital Gains Tax (CGT)

It’s not strictly a property tax but in most cases you will have to pay it when selling a property with a gain.

It’s 18% and 28% on your gains from residential property depending on the size of your gain. If you are a UK tax resident, the CGT tax is paid as part of your annual tax return, and if not, within 30 days from disposal of the asset.

According to new rules since 1 April 2017, companies owning residential property also need to pay this tax.

There are certain exemptions as with every other tax. For example, if you have lived in the property for some time, you can reduce the tax amount.

Council Tax

It must be paid to a local council by any household i.e. any type of property, a flat or a house. The money is used to maintain the surrounding area.

Tax rate depends on the valuation band of your property and is calculated in a complex way for every home individually.

Some households, e.g. full-time students don’t have to pay Council Tax. You can also get a discount on a property in repairs or on an empty home.

Inheritance Tax (IHT)

Similar to the CGT, this tax is not a strictly property tax, but in most cases, you will have to pay it when dealing with a property.

It’s 40% of the property value on the owner’s death. A spouse of a diseased person doesn’t have to pay this tax, but all other beneficiaries are liable to the full-rate tax. The transfer of title is only possible after the tax bill is paid, and it’s often necessary to sell a property in order to pay the bill.

In 2017, a new measure was introduced offering an additional nil-rate band when a residence is passed on death to a direct descendant. It only applies to an estate, including a main residence, and does not apply to a property owned by the diseased but never used by them to live there, e.g. let out property.

Minimise your taxes with Imperial & Legal

Our experts have experience and knowledge to advise you on property-related taxes currently applicable in England and help you minimise tax burden when you buy, sell, rent, lease or inherit real estate. We practice case-by-case approach, deal with every client individually which benefits both us and the client. We constantly keep track of all the changes in legal and taxation systems and know about any new taxes or amended rates.

All you need to do is call us or send a message via an online form and we come back to you as soon as possible. We will assign you a personal manager that will deal with all your concerns and issues.

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One of our qualified advisors will get back to you today or next business day.