Property tax: what is it?
If you make money from renting out a property, you will likely need to pay a form of property tax.
Earnings from property rental are, in essence, treated like any other form of income, though you are granted a ‘property allowance’ of £1,000 (meaning that the first £1,000 you earn is tax-free). Once you’ve crossed this threshold, the relevant income tax rate will be payable.
Other landlord tax liabilities may be incurred. For example, if you’re running a property business and make more than £5,965 a year, you will also be required to pay ‘class 2’ national insurance contributions (NICs). In addition, should you purchase a second home or buy-to-let investment, you will be charged an extra 3 in stamp duty land tax; and, if you are a landlord and go on to sell a property that is not your main residence but which has increased in value, a capital gains tax payment will also be due.
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