UK real estate carries more distinct taxes than any other asset class, and several of the numbers moved in 2026. The capital goods scheme threshold rose to £600,000 on 29 July 2026, the main pool writing down allowance fell to 14% in April, and the furnished holiday lettings regime is gone. Stamp duty, meanwhile, is three different taxes depending on where the property sits.
Stamp duty land tax
SDLT applies in England and Northern Ireland only. Scotland charges land and buildings transaction tax and Wales land transaction tax, each with its own rates — Welsh LTT replaced SDLT on 1 April 2018 and is administered by the Welsh Revenue Authority.
Residential rates run 0% to £125,000, 2% to £250,000, 5% to £925,000, 10% to £1.5m and 12% above. On top of that sit two surcharges: 5% for additional dwellings where the purchase means owning more than one residential property, and 2% for non-UK residents. First-time buyer relief gives no SDLT up to £300,000 and 5% between £300,001 and £500,000, with no relief at all above £500,000.
For companies there is a separate charge: a flat 17% on residential property costing more than £500,000, effective 31 October 2024. It applies to companies, partnerships with a corporate partner and collective investment schemes — not to a company acting as trustee of a settlement — and is displaced by reliefs including property rental business, property development and trading, and properties occupied by the purchaser's employees. Claiming the right relief is what makes corporate ownership viable, and the relief has to be claimed on the return.
Non-residential and mixed use is gentler: zero to £150,000, 2% to £250,000, 5% above. In Scotland, LBTT residential runs to 12% over £750,000, with an additional dwelling supplement of 8% for transactions on or after 5 December 2024.
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The annual tax on enveloped dwellings applies where a company holds a dwelling worth more than £500,000. The current valuation date is 1 April 2022, or the acquisition date if later. For the chargeable period 1 April 2026 to 31 March 2027 the annual charges are:
- Over £500,000 up to £1m — £4,600;
- Over £1m up to £2m — £9,450;
- Over £2m up to £5m — £32,200;
- Over £5m up to £10m — £75,450;
- Over £10m up to £20m — £151,450;
- Over £20m — £303,450.
Reliefs are available for genuine commercial letting and several other uses, but they must be claimed annually on an ATED return — a filing that is easy to miss precisely because the relief means no tax is payable.
Income: the finance cost restriction
For individual landlords, relief for residential property finance costs — mortgage interest, loan interest and associated fees — is restricted to the basic rate. The phase-in finished in 2020/21: no deduction at all, with relief given instead as a 20% tax reducer on the lower of the finance costs, the property profits, or adjusted total income above the personal allowance.
The restriction does not apply to companies or to commercial property, which is the single biggest driver of incorporation decisions among leveraged landlords. Our guide to incorporation relief on property covers the capital gains and SDLT consequences of acting on that.
Capital allowances
Two rates matter. The structures and buildings allowance gives 3% a year straight line over 33⅓ years, from April 2020, on qualifying construction where the contract was signed on or after 29 October 2018. It excludes residences, land, integral features, and planning, financing and legal costs.
Integral features go in the special rate pool at 6% reducing balance — lifts and escalators, space and water heating, air conditioning, hot and cold water systems other than toilet and kitchen facilities, electrical and lighting systems, and external solar shading.
The main pool rate changed on 1 April 2026 for corporation tax and 6 April 2026 for income tax, falling from 18% to 14%, with a hybrid rate for straddling periods. The special rate pool stays at 6%. On a property purchase, the fixtures analysis and a section 198 election decide who gets the allowances, and getting it wrong extinguishes them permanently.
VAT
Supplies of land are usually exempt, which blocks recovery on acquisition and improvement costs. Opting to tax converts them to standard-rated and unlocks recovery, at the price of charging VAT on rents — which matters where tenants are themselves exempt. Notification is normally within 30 days, there is a six-month cooling-off period allowing revocation where no VAT has been charged and no transfer of a going concern has occurred, and revocation is also possible after 20 years.
The option does not apply to buildings designed or adapted and intended for use as dwellings, which removes a question people often ask about residential service charges.
The capital goods scheme threshold for land and buildings rose from £250,000 to £600,000 excluding VAT, with effect from 29 July 2026. Computers and computer equipment left the scheme entirely from that date; ships, boats and aircraft keep their £50,000 threshold. Existing capital items already in the scheme stay in it until the end of their adjustment period. Any advice still quoting £250,000 as the current threshold is out of date.
Furnished holiday lettings: abolished
The FHL regime ended for income tax and capital gains tax for periods from 6 April 2025, and for corporation tax from 1 April 2025. Four advantages went with it: loan interest is now subject to the basic rate finance cost restriction; capital allowances are no longer available for new expenditure, with replacement of domestic items relief applying instead; roll-over relief, business asset disposal relief and gift relief were withdrawn; and FHL income no longer counts as relevant UK earnings for pension relief.
Income and gains now form part of the person's ordinary UK or overseas property business. Our guide to furnished holiday let tax covers the transitional position.
Where the value is
Real estate tax rewards sequencing more than cleverness. The SDLT consequence is fixed at completion and cannot be improved afterwards. The capital allowances position on a purchase is fixed by an election with a two-year window. The VAT position on a development is fixed by an option made — or not made — before costs are incurred. Each of those is a decision taken early with a permanent effect, and each is routinely left to the end of a transaction.
Acumon advises investors, developers and landlords through property taxes, SDLT and ATED work, with property VAT advice, capital allowances and property accounting alongside. If you are buying a commercial property this quarter, the fixtures position is the item to raise in heads of terms rather than at completion.