ListenToTaxman.com

UK PAYE Tax Calculator / Salary Calculator

The number 1 free UK salary calculator tax calculator since 1998. Calculate salary, national insurance, HMRC tax and net pay

Landlords - Tax rates and allowances for 2020/21 Updated

Tax rates and allowances relevant to Landlords for 2020/21

Rita4Rent Michael Wright This Guide was produced by Michael Wright, Landlord Tax Expert at Rita4Rent, who are specialist landlord tax advisors, and the sole recommended tax advisors of the Residential Landlords Association. Michael now writes for Listentotaxman.com on matters relating to property and landlord tax. Rita4Rent are very happy to speak with Listentotaxman visitors to discuss any tax questions they might have – just visit the Rita4Rent website for contact details.

Rita4Rent Michael Wright This Guide was produced by Michael Wright, Landlord Tax Expert at Rita4Rent, who are specialist landlord tax advisors, and the sole recommended tax advisors of the Residential Landlords Association. Michael now writes for Listentotaxman.com on matters relating to property and landlord tax. Rita4Rent are very happy to speak with Listentotaxman visitors to discuss any tax questions they might have – just visit the Rita4Rent website for contact details.

This is a collation of tax and allowances that are relevant to our Landlord visitors.

Income Tax

The tax you pay on your net rental profits, after any losses brought forward are deducted, if you exceed the personal allowance.

Note: dividend tax rates are 7.5%, 32.5% and 38.1% respectively.
* Where your adjusted net income exceeds £100,000 your personal allowance will reduce by £1 for every £2 you exceed it by.
Tax Rates – England & Wales 2020/212019/20
Personal Allowance * £12,500 £12,500
Basic Rate Band of 20% £37,500 £37,500
Higher Rate Band of 40% £150,000 £150,000
Additional Rate Band of 45% £150,000+ £150,000+
Tax Rates – Scotland2020/21
19% Starter rate £12,501
20% Basic rate £14,586
21% Intermediate rate £25,159
41% Higher rate £43,431
46% Top rate £150,000+
Other Allowances for Landlords
 2020/212019/20
Property Income Allowance £1,000 £1,000
Rent a Room Relief * £7,500 £7,500
Marriage Allowance £1,250 £1,250
Dividend Allowance £2,000 £2,000
Savings Allowance
Basic Rate Taxpayer £1,000 £1,000
Higher Rate Taxpayer £500 £500
Additional Rate Taxpayer Nil Nil
* Restricted to £3,750 if jointly owned property.

Capital Gains Tax

The tax you may pay when you sell a rental property and make a gain above the annual exempt amount.

Tax Rates2020/212019/20
Annual Exmption £12,300 £12,000
Residential Properties    
Basic Rate Taxpayer 10% 10%
Higher Rate Taxpayer 28% 28%
Non Residential Properties
Basic Rate Taxpayer 10% 10%
Higher Rate Taxpayer 20% 20%

Corporation Tax

The tax you pay on income and gains when you hold the rental property in a company

Tax Rates2020/212019/20
Corporation Tax Rate 19% 19%

Stamp Duty Land Tax (SDLT)

The tax you pay when you buy a new property.

Tax Rates2020/212019/20
Residential Properties
£0- £125,000 0% 0%
£125,000 - £250,000 2% 2%
£250,000 - £925,000 5% 5%
£925,000 - £1,500,000 10% 10%
£1,500,000 + 12% 12%
Rates are increased by 3% if the property is a second property or purchased in a limited company.
In rare cases where a property is valued over £500,000, a 15% rate may be applied.
Non-Residential Properties2020/212019/20
£0 - £150,000 0% 0%
£150,000 - £250,000 2% 2%
£250,000 + 5% 5%

Inheritance Tax

The tax you may pay when you die and holding rental property. There are a number of exemptions for IHT.

Tax Rates & Thresholds2020/212019/20
Nil Rate Band £325,000 £325,000
Residence Nil Rate Band £175,000 £150,000
Spouse Exemption* Unlimited Unlimited
Lifetime Rate** 20% 20%
Death Rate 40% 40%
* Where the spouse is non-domiciled to the UK, the spousal exemption is restricted to £325,000.
** A lifetime rate of inheritance tax may be charged on transfers into a trust.

Thank-you to Michael Wright, Director/Owner at Rita4Rent, Property Tax specialist for compiling all this information. Michael, also writes regular guides and articles for Listentotaxman on the subject of Property and Landlord Tax. If you have a query directly for Michael, do go to his website.

This article was published in our Guides section on 29/06/2020.

Some Guides you may be interested in

More from our Guides section

397