Property knowledge
What you need to know about insurance and tax when buying to let in the UK

What you need to know about insurance and tax when buying to let in the UK

Buy-to-let in the UK is an attractive profit model with high overall returns, which is a medium - and long-term investment.  But the details of letting a PROPERTY in the UK can be more complicated than you think, so it's worth clarifying the insurance and tax implications of buy-to-let.  

So today we will take you to understand the details of the house rental need to consider!  

Property insurance  

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f you buy a Freehold property in the UK, you need to take out a home insurance policy, and lenders will also require that the house be insured when they lend it out.  Property insurance covers non-human damage to ceilings, floors, walls, roofs, doors and Windows, as well as damage caused by fire, lightning, flash floods, explosions, volcanic eruptions and other natural disasters.  

Ask about your home insurance after you exchange contracts, and make sure your new home's building insurance kicks in the day you take over.  Because from the day the house is handed over to you, since you become the owner of the house, all risks are transferred to your name.  Property insurance should be the responsibility of the permanent owner of this apartment.  Larger building owners tend to turn the building over to a property management company to manage the whole building, and all you have to do is pay the property management fee.  


Property insurance protects the personal effects of a home.  So this insurance who live who pay, do not need to pay for the landlord.  Property insurance will pay for loss of personal belongings caused by non-personal factors such as theft, fire or flood.  

Property insurance is generally divided into two types:  

Indemnity for Losses  

It is to compensate according to the old and new degree of loss damaged goods, for example, new goods, the amount of compensation is high, depreciation of goods, the amount of compensation is relatively less.  

New for Old:  

As the name implies, no matter how long things are used, they are compensated according to the price of new items.  But in this case, the premium will be more expensive.  

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Landlord liability insurance  

Landlord liability insurance mainly protects landlords.  If a tenant, visitor or plumber is injured in your property and asks the landlord for compensation, landlord's liability insurance will cover the loss.  Landlord liability insurance does not require compulsory purchase.  

Landlord protection insurance covers:  

Your legal liability for personal injury to a tenant or other person  

Your legal liability for property damage to your tenant or others  

Your legal liability for damage to common areas, such as building halls and adjacent property, caused by tenants or others  

Landlord insurance is not guaranteed:  

Intentional damage or personal injury (not caused by accident)  

Revenue losses  

Damage to premises or property  

The rent tax  

Income from rent in the UK is added to personal income tax, which is tiered.  Both overseas and local landlords are required to declare and pay tax on their UK rental income for each tax year.  Landlords are required to submit their annual Self-assessment Tax Return on time every year, regardless of whether they live in the UK or have British nationality.  

In the UK, the amount of Income Tax payable depends on current Income Tax rates and the amount of tax-free Personal Allowance.  The amount of income tax an investor is required to pay in each tax year depends on the following:  

What is the current tax-free Personal Allowance in the UK?  

How much net income investors receive from UK rents exceeds the personal allowance.  

Which Income Tax rates and bands do investors earn?  

What is an investor's income tax-free?  

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Capital gains tax  

If the price of the house is higher when you sell it than when you buy it, then the difference is taxable.  UK residents are subject to the tax on capital gains made within and outside the UK.  Capital gains on residential property are taxed at 28% and on other assets at 20%, if the individual income tax rate is higher or higher.  

If the basic rate of individual income tax applies, the specific rate of capital gains tax needs to be determined by combining the amount of capital gains and taxable income.  In addition, capital gains tax is generally not levied on gifts made between spouses, to government departments and charities.  There are a number of capital gains tax deductions for equity sales, including entrepreneur benefit, gift relief, enterprise investment Plan, seed enterprise Investment Plan and extension benefit.  

Stamp duty  

When buying a property, Stamp Duty Land Tax (SDLT) is required to be paid to the Inland Revenue Department so that the transaction can be approved by the government.  This is the main tax on property purchases in the UK.  

Anyone buying a house in Britain must pay stamp duty to the Tax office before the sale can be approved by the government.  Stamp duty is also the biggest tax on property purchases and must usually be paid within 30 days of the sale.  

For UK residents who buy their first home and the total price is less than £500,000, stamp duty will be exempted for the part of the value below £300,000, and the value between £300,000 and £500,000 will be charged at the sole base rate for property.