Buy-to-let tax implications
Stamp Duty Land Tax (SDLT) applies to residential properties worth more than £125,000 and non-residential worth £150,000 (except for Scotland where you’ll pay Land and Buildings Transaction Tax instead).
SDLT applies to leasehold and freehold properties whether you’re a cash buyer or buying with a mortgage. You must also pay it if you buy through a shared ownership scheme or if you are transferred land or property (if you buy a share in a property or take on a mortgage).
Since 1 April 2016, an additional 3% has been added on to each SDLT band for residential buy-to-let properties.
You’ll likely have to pay income tax on your income from rent as well as Stamp Duty. You can, however, offset mortgage payments and some costs against this income.
Since April 2017, additional rates of tax relief have started to be phased out and by 2020 will be restricted to 20% for all landlords.
You will also have to pay Class 2 National Insurance if it counts as renting out a business.
If you make money when you sell your property, you’ll be liable to Capital Gains Tax.