UK Property Tax


Are you paying too much property tax?

City property tax is the same as property tax in the UK. Tax is calculated for you by default in excess by the Inland Revenue, unless you undertake and submit your own tax return. The only local property tax is council tax. You don’t have to become a property tax expert or hire an expensive property tax consultant.

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Online Property Tax

You can file your property tax online at HM Revenue & Custom together with your income tax. There isn’t a special property tax portal, property tax return and income tax are calculated jointly.
This provides calculation and faster refund of property tax credit directly into your bank account. You can also get to select how to pay any tax you owe.

Capital Gains Tax Property Exemption

When you sell a property and realize a profit, then capital gains tax (CGT) applies. In plain English this is property sales tax. Currently set at a flat rate of 18%. Before 2007 it was charged based on income tax. This was the most important property tax reform for many.

Many people are looking for Property Tax Relief, and the only time you don’t pay this tax bill is when you sell your Principal Private Residence (PPR), i.e. when you sell your main residence where you actually live or lived in. This is the only time you get free property tax.

36-Month Rule

If you own a property that was previously your PPR, then the last 36 months will qualify for tax relief.

The First 12 Months of Ownership

If you buy a property and do not move in immediately, you can still claim relief for the first 12 months. This rule is aimed to help those whose circumstances change unexpectedly, are renovating the property or tied into a rental contract elsewhere. This is also referred to as ‘empty property tax’.

TIP Council Tax Exemption
Local Council tax will also be free for up to six months while the property is Not-Livable.

Buy-to-Let Tax

This is the annual property tax in the UK also referred to as investment property tax. It is in fact Rental Property Income Tax and is charged based on income tax rates. In summary, your property tax banding is the same as your income tax as both incomes are added together for tax calculations.

The taxman requires you to keep records of rental income, and expenses. To put it simply: your receivables are rent, and your expenses are:

• interest paid on the mortgage
• any insurances
• maintenance
• wear and tear
• traveling and some other expenses

You may be allowed you to discount losses of rent.

Are you keeping property tax records?

For more on property inheritance tax, and on how to save on tax you can get free booklets from the Inland Revenue, that are difficult to interpret. You may research the web for free bits and pieces, but it’s difficult to ascertain whether the information is accurate.
Property Tax Secrets 2008 is a user friendly publication loaded with examples and case studies as well as useful spreadsheets. It’s available in hardcopy and electronically. It comes with multiple spreadsheets to assist you doing your property tax assessment and saving tax.

For only £34.50 this trial-and-tested publication might save you thousands if not hundreds of thousands. With this added value you can fulfill any dream or project, or go travel around the world. Just think about it!

You can’t avoid property tax. But you might be able to pay less property tax. For more on property tax reduction, holiday property tax, inheritance tax, property tax for non-residents, land and property tax, property tax law, we recommend this extraordinary property tax book, which will assist you with property tax calculation.

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If you must pay property tax in the UK, keep abreast property tax changes for free at: http://www.taxguide.co.uk/

TIP: Stamp Duty Exemption

When buying property ask your solicitor to check whether it is located eligible area for stamp duty relief. He won’t necessarily check if you don’t ask him to. This is one more form of property tax exemption. Stamp duty can be considered a transfer of property tax.
The stamp duty threshold has been raised to £120,000 as an incentive for first time buyers.

For complete specialised tax guides, visit our Property Trading Tax Cafe Page