Illustration A, £385,000.00
£28,500.00
Additional dwelling SDLT. See the slice table on the examples page.
Home / UK rules
The rules that change the ledger, not the listing.
Cash flow in Britain is not only rent minus a mortgage. Stamp duty, the finance-cost restriction, leasehold bills, and licensing decide whether a "yield" is collectable. This page is a map. It is not advice for your purchase.
Stamp duty on the way in
Our illustrations use Stamp Duty Land Tax for a UK-resident buyer of an additional dwelling in England or Northern Ireland. The higher rates add 5 percentage points to every band, including the first, for purchases of £40,000 or more. They have been at that 5 point surcharge since 31 October 2024. The nil-rate threshold in the table is the one that has applied since 1 April 2025.
Scotland charges Land and Buildings Transaction Tax. Wales charges Land Transaction Tax. A non-UK resident buyer of English or Northern Irish residential property can face a further 2 percentage point surcharge. Replacing a main home has its own tests, including a possible refund if you sell the old home in time. First-time buyer relief is a different table and usually irrelevant to a buy-to-let. Check the bands on the day you exchange.
| Portion of the price | Only or replacement home | Additional dwelling |
|---|---|---|
| Up to £125,000 | 0% | 5% |
| £125,001 to £250,000 | 2% | 7% |
| £250,001 to £925,000 | 5% | 10% |
| £925,001 to £1,500,000 | 10% | 15% |
| Above £1,500,000 | 12% | 17% |
Illustration B, £228,000.00
£13,460.00
Most of the bill sits in the 5% and 7% slices.
Illustration C, £340,000.00
£24,000.00
Before the licence works, which are extra cash, not tax.
Section 24, in one page
Individual landlords of residential property do not deduct mortgage interest and other finance costs as a rental expense. They receive a tax reduction at the basic rate instead. While the basic rate is 20%, the reduction is 20% of the finance costs, and it is capped by the property profit and by income above the personal allowance. Costs that do not fit in the year can be carried forward. The popular name is Section 24, after the Finance (No. 2) Act 2015.
The cash ledger still subtracts the full interest, because the bank takes the full interest. The tax return can show a larger profit than the cash you kept. Companies are in a different regime: interest is generally dealt with under corporation tax rules, and moving a portfolio into a company can trigger stamp duty and capital gains tax. That is a decision for a tax adviser, not a blog.
Read the worked tax illustrationLeasehold bills
On a flat, budget the service charge you have seen in writing, not the figure in the advert. Ask what is reserved for major works. A Section 20 consultation on a roof or a lift can land a four-figure demand that no gross yield mentioned. Ground rent is usually smaller and still a line. We put both on illustration A: £1,680.00 and £250.00 a year, as assumptions, not as a quote from a real block.
Shared houses
A house in multiple occupation can need a licence, fire doors, alarms, and a different mortgage. If the rent is inclusive, council tax and utilities are the landlord's cash, every month, including during a half-empty term. Illustration C carries £6,400.00 of bills and an annualised licence cost of £750.00. Mandatory, additional, and selective schemes differ by council. Read the local scheme before you price the rooms.
A compliance calendar that belongs in the reserve
| Item | Why it is on a cash-flow blog | How we treat it |
|---|---|---|
| Gas safety | Annual check where gas is present. A failed letting week often starts here. | Inside the compliance allowance, not as a surprise. |
| Electrical installation | England expects an electrical report on a cycle of up to five years, and on a change of tenancy in many cases. Remedial work is the expensive part. | Inspection in compliance. Remedials in the repairs reserve or in day-one works. |
| Smoke, CO, alarms | Small sums, large reasons a tenancy should not start. | Day-one if missing, then a replacement line. |
| Energy performance | Minimum energy efficiency standards have restricted the letting of the coldest homes in England. Further tightening has been discussed for years. An F or G, or a future higher bar, is a works budget. | Price the works before exchange. Do not hide them in "yield". |
| Deposit and right to rent | Prescribed information and protection deadlines. A penalty is not a repairs reserve. | Process, not a yield adjustment. Mentioned so it is not forgotten. |
| Possession timetable | The route to recover a home has been reformed and commencement detail matters. Do not underwrite a void as if a two-month notice still ends the story. | Use a longer void in the stress test if you may need the property back. |
Updated 28 October 2026. Bands and duties above are described so a reader can see how they hit cash. Confirm them against GOV.UK and the local authority before you rely on a number.