Understanding the New Tax Rules for Property Investors in 2025

If you’re thinking about investing in property in 2025, it’s important to understand the new tax rules that could affect you. Property investing means buying homes or buildings to make money from them, either by renting them out or selling them later at a higher price. But just like any business, property investors need to pay taxes on the money they make. In this blog, we’ll explain the new tax rules in a simple way so you can understand how they work.

What Is Property Investment?

Property investment is when someone buys a property (like a house, flat, or commercial building) with the goal of making money. You can make money from property investment by:

• Renting the property out - This means you get paid every month by the people who live in or use your property.
• Selling the property for a higher price - After some time, you might decide to sell the property for more than you paid for it.

As a property investor, you need to pay tax on the money you earn from these activities. The rules about how much tax you pay and when have changed in 2025, so let’s take a closer look at what’s different.

1. Income Tax on Rental Income

If you are renting out a property and making money from it, you’ll need to pay income tax on the rent you receive. This means that after you’ve collected rent from your tenants, you will have to pay a percentage of that money to the government. The more you earn, the higher the percentage you’ll need to pay.
In 2025, there are some changes to how much you can deduct from your rental income before you pay tax. You can still deduct costs like:

• Maintenance and repairs on the property.
• Mortgage interest (the amount you pay the bank for borrowing money).
• Property management fees.

However, the government has made changes that affect how much you can deduct for these costs. You’ll need to check the new rules and speak to an accountant or tax expert to make sure you’re paying the right amount of tax.
For more tips on property management and taxes, take a look at Oakmans’ property management services for helpful advice.

2. Capital Gains Tax on Selling Property

Capital Gains Tax (CGT) is the tax you pay when you sell a property for more than you bought it. For example, if you bought a house for £150,000 and later sold it for £200,000, you would need to pay tax on the £50,000 profit.
In 2025, the rules around CGT have changed a little. The amount of tax you pay will depend on how much profit you make and how long you’ve owned the property. The government has also reduced the tax-free allowance, which means you might need to pay tax on a larger portion of your profit.
It’s important to keep track of your profits and talk to a tax advisor if you’re planning to sell a property. They can help you understand how much tax you will need to pay and how to reduce the amount of tax you owe.

3. Stamp Duty for Investors

When you buy a property, you have to pay Stamp Duty. This is a tax on property purchases, and it varies depending on the price of the property. In 2025, there are still some changes to Stamp Duty, especially for property investors.
If you are buying a property to rent out or sell later, you may have to pay an extra 3% Stamp Duty on top of the normal rates. This is to make sure that people who buy multiple properties are contributing more to the government’s tax income.
If you’re planning to buy a property to invest in, make sure to budget for this extra Stamp Duty cost.

4. Tax on Short-Term Rentals (Airbnb)

If you’re renting out a property on platforms like Airbnb, you may need to pay a different type of tax. The government is focusing more on short-term rental properties, and there are new rules about how much you can earn before you need to pay tax.
In 2025, the tax-free allowance for short-term rentals has been reduced, so if you’re earning more from renting out your property on Airbnb, you’ll need to pay tax on the income.
If you’re using a platform like Airbnb to rent out your property, it’s important to keep track of your earnings and talk to a tax expert about how much tax you’ll need to pay.

Final Thoughts

The new tax rules for property investors in 2025 may seem confusing at first, but they’re important to understand. Whether you’re renting out a property, selling it for a profit, or using it for short-term rentals, the government wants to make sure you’re paying the right amount of tax. Make sure to stay updated with the new rules, keep good records of your property income and expenses, and get professional advice if you need it.
For more information on managing your property and understanding tax rules, visit Oakmans’ lettings page for more details.

Key Takeaways:

• Property investors need to pay income tax on rental income, with changes to what costs can be deducted.
• Capital Gains Tax is charged on the profit from selling a property.
• There are extra costs like Stamp Duty for property investors.
• Short-term rental income, like from Airbnb, is also taxed, and there are new rules for this.

These tips will help you stay on top of the new tax rules and make sure you’re paying the right amount in 2025.
For more details on tax changes and how they may affect you, visit the gov.uk website.