Buy-to-Let Tax Guide 2026/27
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Try free →The full tax picture for a buy-to-let, in order
Buy-to-let tax touches four separate points: Stamp Duty when you buy, Income Tax on rental profit each year, Section 24’s mortgage interest treatment while you own it, and Capital Gains Tax when you eventually sell. Understanding each stage separately, rather than as one blurred "landlord tax" concept, makes the real cost of owning a rental property much clearer.
The four stages
- Buying: a 5% additional-property Stamp Duty surcharge applies on top of standard SDLT rates if you already own another residential property anywhere in the world
- Annual rental profit: taxed at your marginal Income Tax rate (20%, 40% or 45%) on top of your other income, after deducting genuine running costs — but not mortgage interest directly
- Mortgage interest: handled separately under Section 24, giving a flat 20% tax credit rather than a full deduction, which costs higher and additional-rate taxpayers real money compared to the pre-2020 rules
- Selling: Capital Gains Tax applies to the profit on sale — 18% within your basic rate band, 24% above it — after your annual exempt amount and any allowable costs of buying, selling and improving the property
Why the real number is rarely what people expect
Because these four elements interact — Section 24 can push your taxable income higher, which then affects your CGT rate band on eventual sale — the true all-in tax cost of a buy-to-let is genuinely difficult to estimate by hand. Running your specific numbers through a dedicated buy-to-let calculator is far more reliable than adding up each element separately.