Buy-to-let tax guide 2026
A plain-English guide to stamp duty, income tax, capital gains tax, and mortgage interest relief for UK landlords in 2026.
Stamp duty on additional properties
When buying a second property (including buy-to-let), you pay a surcharge on top of the standard stamp duty rates. As of 2024-2026:
£0-£250,000: 3% surcharge £250,001-£925,000: 8% £925,001-£1,500,000: 13% Above £1,500,000: 15%
On a £300,000 BTL purchase, you'd pay approximately £11,500 in stamp duty. This is a significant upfront cost that must be factored into your ROI calculations. See the dedicated SDLT 2026 guide for worked examples across common purchase bands, or the deal-analysis checklist for how to roll it into yield and DSCR.
Income tax on rental profits
Rental income is added to your other income and taxed at your marginal rate. After deducting allowable expenses (letting agent fees, insurance, maintenance, ground rent), you pay:
Basic rate (20%): £12,571-£50,270 total income Higher rate (40%): £50,271-£125,140 Additional rate (45%): above £125,140
Mortgage interest is no longer a deductible expense. Instead, you receive a 20% tax credit on mortgage interest payments, which means higher-rate taxpayers pay more effective tax than before.
Capital gains tax on sale
When you sell a buy-to-let property, you pay CGT on the profit. The rates for residential property are:
Basic rate taxpayers: 18% Higher rate taxpayers: 24%
You receive an annual CGT allowance (currently £3,000), and you can deduct purchasing costs, selling costs, and improvement costs (but not maintenance) from the gain. Energy-efficiency retrofit costs required to meet the 2028 EPC C rule typically qualify as improvements and reduce your CGT bill when you eventually sell.
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