UK property taxes
A home in the UK meets three taxes: a one-off transaction tax on purchase, council tax every year it is lived in, and capital gains tax on sale. The council tax band rests on the property's value at a fixed historic date.
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- Transaction tax
- At purchase
- Council tax
- Each year
- Capital gains tax
- On sale
- Annual tax on enveloped dwellings
- Each year
The purchase price is only part of what a home costs: one tax falls at the moment of buying, another every year it is occupied, and a third when it is sold. The purchase itself is at buying property in the UK.
01
Which taxes does a UK homeowner pay?
A homeowner meets three taxes: a one-off transaction tax at purchase, council tax for every year the home is lived in, and capital gains tax on sale. A home held in a company can also meet the annual tax on enveloped dwellings.
| Tax | When | Basis |
|---|---|---|
| Transaction tax | At purchase | The price, in bands |
| Council tax | Each year | The property's band |
| Capital gains tax | On sale | The gain, by taxpayer rate |
| Annual tax on enveloped dwellings | Each year | Company-held homes above a value threshold |
02
How is council tax calculated?
Council tax comes from three figures: the property's band, the annual amount the local authority sets for that band, and any discount the household qualifies for. Bands rest on values at 1 April 1991 in England.
Because the band rests on a valuation from 1991 in England and 2003 in Wales, it does not follow what a property is worth today. Two similar homes can therefore sit in different bands, and challenging a band is a separate published process.
03
Who gets a council tax discount?
Council tax applies to everyone aged 18 and over, and a full bill assumes two adults in the home. A person living alone, or where everyone else is disregarded, receives a 25 per cent discount.
- A household where everyone is a full-time student is exempt.
- A single adult household receives a 25 per cent discount.
- Certain residents are disregarded when counting adults, including full-time students.
- Discounts are claimed rather than applied automatically.
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04
Does council tax rise on empty and second homes?
A local authority doubles council tax on a furnished second home nobody lives in. On a home empty for at least a year the rate depends on how long, and a home empty ten years or more carries the highest multiple.
05
Which transaction tax applies in Scotland and Wales?
The transaction tax on a home purchase depends on where the property sits: stamp duty in England and Northern Ireland, Land and Buildings Transaction Tax in Scotland, and Land Transaction Tax in Wales, each with its own published bands.
| Country | Tax |
|---|---|
| England and Northern Ireland | Stamp Duty Land Tax |
| Scotland | Land and Buildings Transaction Tax |
| Wales | Land Transaction Tax |
06
How much is capital gains tax on a home sale?
From 6 April 2026 HMRC charges capital gains tax at 18 per cent for basic rate taxpayers and 24 per cent for higher rate taxpayers. The first £3,000 of gain is exempt in the 2026-2027 tax year.
A home that has been the seller's only or main residence throughout is generally relieved from the charge, and the relief is set out separately by HMRC. Whether it applies to a particular sale is a question for a tax adviser.
Sources
- GOV.UK — Council tax bands rest on the property's value at 1 April 1991 in England and 1 April 2003 in Wales. — 31 August 2026
- GOV.UK — Council tax applies from age 18, a full bill assumes two adults, and a single adult household receives a 25 per cent discount. — 26 August 2026
- GOV.UK — A local authority can double council tax on a furnished second home and charge a higher multiple on a home left empty, rising with the length of the vacancy. — 26 August 2026
- GOV.UK — From 6 April 2026 capital gains tax is charged at 18 per cent for basic rate taxpayers and 24 per cent for higher rate taxpayers, with the first £3,000 of gain exempt in 2026-2027.
