It is important to understand your budget before purchasing a property, as it prevents you from overspending and guides you — a pragmatic approach in your property search which saves time.
It also improves mortgage planning — how much you can borrow, the deposit required, and what monthly payments will look like.
You must remember your budget includes more than the price of your property — it also needs to include taxes, mortgage fees, and professional service costs.
These additional fees depend on the complexity of your purchase. We’ll provide transparent guidance on these costs as your investment progresses.
Stamp Duty Land Tax
UK or non-UK resident — any individual who acquires a property in the UK must pay the Stamp Duty Land Tax (SDLT).
The SDLT is a tax an individual must pay when purchasing a property or land in England or Northern Ireland. You must pay your SDLT within 2 weeks of completing your property purchase.
Residential Property Rates of SDLT:
From 1st April 2025, First-Time Buyers relief will apply on properties up to £300,000.
• 0% SDLT for properties up to £125,000
• 2% on properties ranging from £125,000 – £250,000
• 5% on properties ranging from £250,000 – £925,000
• 10% on properties ranging from £925,001 – £1.5 million
• 12% on properties £1.5 million and above
Commercial Property Rates of SDLT:
SDLT applies when you pay £150,000 or more for non-residential or mixed land/property.
You must still file an SDLT return even for transactions under £150,000.
Non-residential properties include commercial buildings (shops, offices), unsuitable buildings, forests, agricultural land used for farming, and more.
Mixed properties have both residential and non-residential parts (e.g., a flat above a shop).
Agricultural land sold as part of a dwelling’s garden is charged at residential SDLT rates.
Freehold sales:
- Up to £150,000: 0%
- £150,001 to £250,000: 2%
- Above £250,000: 5%
Leasehold sales:
SDLT is charged on both the lease premium (purchase price) and the net present value (NPV) of rent.
NPV SDLT rates:
Up to £150,000: 0%
£150,001 to £5,000,000: 1%
Above £5,000,000: 2%
Surcharge for Non-UK Residents
SDLT is charged on both the lease premium (purchase price) and the net present value (NPV) of rent.
NPV SDLT rates:
• Up to £150,000: 0%
• £150,001 to £5,000,000: 1%
• Above £5,000,000: 2%
Example
Hasan lives in Austria and purchases a residential property in England for £800,000 on 1 June 2025.
Between 2 June 2024 and 1 June 2025, he spent 200 days in the UK.
Because he meets the 183-day rule, Hasan is treated as a UK resident for SDLT purposes, so the 2% non-resident surcharge does not apply.
However, if he hadn’t met this rule, he would have to pay the surcharge—but might be able to claim a refund later if he spends enough time in the UK after the purchase.
To calculate your SDLT, click on the link: Stamp Duty Land Tax Calculator
Other Important Taxes to Consider
Capital Gains Tax: This is a tax individuals must pay when they sell a property that has increased in value over time. For example, if you sell a property for more than you bought it for, you may need to pay CGT. Therefore, you should plan carefully to understand potential CGT liabilities before selling property.
Corporation Tax: This is a type of tax charged on profits earned by UK companies, including those earning rental income or capital gains from property. From 2025, the corporation tax rate is 25%. Buying through a UK limited company can offer tax benefits; however, it comes with many compliance ’duties.
Inheritance Tax (IHT): IHT is charged on the estate of someone who has passed away. For example, if the estate exceeds £325,000, the excess rate may be taxed at 40%. When property is passed on to heirs, it can be taxed, but planning with wills or trusts can help reduce how much is owed.
