Flipping properties can be an exciting way to generate profits in real estate, but tax on flipping property UK can reduce those gains if not properly managed. The idea of transforming a rundown property, adding stylish renovations, and selling it for profit appeals to many investors. But it comes with its own financial challenges. In this blog, we will walk you through the tax implications on flipping property so you can focus on turning your next property into a profitable success!
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What is Property Flipping?
Property flipping is when someone buys a property with the goal of quickly selling it at a higher price to make a profit. The basic idea is to add enough value to make a solid profit in a short amount of time. It is a popular way for real estate investors to make money without holding onto the property for years.
Is Property Flipping in the UK Still Worth It?
UK house prices grew by just 1.4% on average in 2019, with some regions seeing declines. This slower growth has made property flipping riskier, compounded by rising fees. You will need to pay Stamp Duty if you buy a property for more than £125,000, if you already own a home, you will face an additional 3% surcharge.
Beyond this, you will also need to budget for legal, survey, and other fees, which can run into the thousands. When selling the property, estate agents’ fees start at 1% plus VAT—equating to around £3,600 on a £300,000 sale.
That said, flipping can still yield substantial returns with careful planning. The key is to thoroughly research the market, account for renovation costs, taxes like Capital Gains Tax and Stamp Duty and make sure there is enough room for profit after all expenses.
Mainly there are two types of taxes that can apply when flipping property in the UK:
- Capital Gains Tax (CGT)
- Income Tax

Capital Gains Tax on Flipping Property UK
When you sell a property in the UK and make a profit, you will be liable to pay Capital Gains Tax (CGT) on those gains, especially if the property is not your main residence. For property flippers who are not running a full-time business, HMRC typically considers property sales as capital transactions.
Each individual has an annual CGT allowance, which is £6,000 for the 2024 tax year. Gains below this amount are not taxable, so it is important to deduct this exemption before calculating your CGT bill.
Calculate Your Gains: To determine your taxable gain, subtract the purchase price and any allowable expenses (like legal fees, agent fees, and renovation costs) from the sale price.
Flipping houses? Avoid Capital Gains Tax UK
HMRC provides certain exemptions and reliefs that property flippers may benefit from if specific criteria are met:
- Private Residence Relief (PRR): If the property was your main residence at any point during ownership, you may qualify for PRR, which reduces the amount of CGT due. Under current rules, the last 9 months of ownership are automatically exempt from CGT, as long as the property was your main home at some point.
- Additional 24-Month Rule: If you needed to carry out major refurbishments before moving in, or if you were delayed in selling your previous home, you may claim up to 24 months from the date of purchase as though the property were your main residence. This can significantly reduce or even eliminate your CGT liability.
Strategies to Reduce CGT Liability
Property flipping can be profitable, but high CGT rates can reduce those gains. Here are some legal strategies to consider:
- Use Your CGT Allowance: If you are flipping properties with a partner, both individuals can use their annual CGT exemptions, effectively doubling your tax-free gains.
- Track All Deductible Expenses: Keep detailed records of all renovation and transaction costs as these can reduce your taxable gain.
- Consider Timing Sales Wisely: If possible, plan sales across tax years to make full use of each year’s CGT allowance.
When Income Tax Applies Instead of Capital Gains Tax
Income tax is another type of tax that applies on house flipping profits. This happens when flipping becomes a frequent activity and HMRC considers it more of a business. It can also happen if you are actively involved in substantial renovations or development of properties to add value, and if the intent behind purchasing properties is primarily for resale at a profit, rather than holding onto them as long-term investments.
The rates for Income Tax depend on your total taxable income for the year and are divided into bands:
- Basic Rate (20%): If your total income is between £12,571 and £50,270 (for the 2023/24 tax year), the profit from your property flipping is taxed at 20%.
- Higher Rate (40%): If your total income exceeds £50,270 but is less than £150,000, the income will be taxed at 40%.
- Additional Rate (45%): If your income exceeds £150,000, the profits will be taxed at the additional rate of 45%.
Note: If your property flipping activities are carried out through a limited company, the profits will be subject to Corporation Tax instead of Income Tax.
National Insurance Contributions (NICs) for Property Flippers
Whilst Class 2 NICs have been abolished, property flippers may still be liable for Class 4 NICs. If your property flipping profits exceed £12,570 in a tax year, you will need to pay Class 4 NICs. These are calculated as a percentage of your profits.
For the 2023/24 tax year, Class 4 NICs are charged at the following rates:
- 6% on profits between £12,570 and £50,270.
- 2% on profits above £50,270.
Principal Private Residence Relief (PPR) and Other CGT Tips
When flipping houses, one of the most important tax exemptions available to homeowners in the UK is Principal Private Residence Relief (PPR). This relief can help reduce or even completely eliminate Capital Gains Tax (CGT) when selling your home.
Here is an overview of how PPR works and how it can benefit you if you meet the right conditions.
What is Principal Private Residence Relief (PPR)?
PPR is a tax relief that can exempt you from paying CGT on the profits made from selling your home, provided it has been your main residence throughout your period of ownership.
This relief can be particularly helpful for buy-to-live-and-sell investors who want to avoid the financial burden of CGT when selling their properties after living in them for a period.
Claiming PPR
To qualify for PPR, the property in question must be your main residence. That means you have to live there for the majority of your time during the period of ownership. A property you consider a second home or an investment property does not qualify for this relief.
For example, a property that you live in for a few weekends a year or only stay at occasionally would not qualify for PPR, as it is not your main home.
Note: Principal Private Residence Relief also does not apply if you sell a property at a loss!
The Last 9 Months Rule
Even if you move out of your home before selling it, you may still benefit from PPR, thanks to the Last 9 Months Rule.
If the property was your main residence at some point, you can still claim PPR for the last 9 months of ownership—even if you were no longer living there.
This rule is incredibly useful for individuals who have lived in a property for several years but need to move out before selling.
Two-Year Election Rule: If you own multiple properties, you have two years from the date of purchase to elect one of those as your main residence. If you do not, HMRC will assume your most recently acquired property is your main residence and CGT will imply when you decide to sell!
Other Tax Implications to Keep in Mind
Stamp Duty Land Tax (SDLT) on Property Purchases
Stamp Duty Land Tax (SDLT) is a tax levied on property purchases in England and Northern Ireland. It applies to both residential and commercial properties, and the amount of tax you pay depends on the value of the property you are purchasing. The tax is paid by the buyer, not the seller, and is due within 14 days of completing the property purchase.
The SDLT rates for residential properties differ based on whether you are a first-time buyer, purchasing a second property, or buying a higher-value home.
Current SDLT Rates for Residential Property
As of 2024, SDLT rates for residential properties are as follows:
- First-time Buyers:
- 0% SDLT on properties costing £425,000 or less.
- 5% SDLT on properties between £425,001 and £625,000.
- For properties priced above £625,000, standard SDLT rates apply (5%, 10%, 12% based on the purchase price).
Second Property Buyers: If you already own a residential property, purchasing a second one triggers the Second Property Surcharge. This is an additional 3% SDLT charge on the entire price of the property.
However, as of 31 October 2024, the surcharge increases to 5%, impacting many property flippers who buy and sell multiple properties.
For instance, if you purchase a second property for £300,000, the surcharge means you will pay an additional 3% on the entire £300,000 (£9,000) on top of the regular SDLT.
How SDLT Affects Property Flipping
Stamp Duty Land Tax (SDLT) can impact property flipping by adding an additional cost when buying a property. If you are buying a property to flip, you will need to pay SDLT based on the property’s purchase price. Consider this in your budgeting to ensure your investment remains profitable.
For second properties, which many flippers buy, there is an extra 3% surcharge on top of the normal SDLT rates, and this has increased to 5% after October 2024. This means if you buy a property for £300,000, you could end up paying thousands of pounds in SDLT.
Council Tax on Property Flipping
When flipping properties in the UK, new investors often overlook council tax. This is a local tax that homeowners must pay to their local council to fund local services such as rubbish collection, street maintenance, and local policing. If you are flipping a property, council tax will apply during the period you own it—whether you are living in the property or it is vacant (unless you can demonstrate that the property is genuinely uninhabitable).
Tip: Always check with the local council to confirm the specific rules around council tax for vacant or renovated properties, as these can differ from one area to another.
General Tax Planning Tips for Property Flippers
If you are flipping properties, a little tax planning can make a huge difference in how much profit you keep. Here are some smart, straightforward strategies to help you minimise tax surprises:
- Know Your Tax Status: Depending on how often you are flipping, tax rules treat you differently. If you are flipping once in a whilst, you might only pay Capital Gains Tax (CGT) on your profits. But if you are doing it frequently, HMRC could classify you as a business, which means paying Income Tax instead—often at a higher rate.
- Keep Track of All Your Expenses: This one is simple but powerful. Keep a record of every expense related to your property, like repairs, renovations, and legal fees. You can usually subtract these costs from your profits, lowering your tax bill.
- Consider Setting Up an LLC: If flipping is more than a hobby for you, setting up a business structure, like an LLC, can give you extra protection and may offer some tax benefits.
- Hold Properties for Over a Year: Selling a property you have owned for over a year often leads to lower taxes than a quick flip. Holding for a year or more could mean paying Capital Gains Tax instead of the higher Income Tax rates.
- Use Tax-Deferred Exchanges: With a 1031 Exchange, you can defer paying taxes by reinvesting the profits from one flip into a similar property. It is like putting off the tax bill until you eventually sell without reinvesting.
- Plan for Self-Employment Taxes: If you are flipping often enough that HMRC considers it a business, be prepared for self-employment taxes. This includes National Insurance Contributions, which apply to business operators.
- Look into Opportunity Zones: Some areas offer special tax breaks if you invest there. By flipping or holding property in these “opportunity zones,” you could get significant tax incentives.
How to Flip a Property for Maximum Profits
Flipping a property can be a profitable venture, but to maximise your returns, you need to plan carefully. Here are some key tips to help you flip a property successfully:
- Choose the Right Property: Focus on properties with potential, ideally in areas with high demand. Look for homes that need cosmetic updates rather than major repairs, as these can be flipped faster and with higher returns. Buy a property for less than its market value.
- Get a Detailed Inspection: Before purchasing, hire a professional inspector to identify any hidden issues like plumbing or electrical problems. This helps avoid costly surprises down the road.
- Stick to a Budget: Renovation costs can add up quickly. Set a realistic budget, including material, labor, and permits, and stick to it. Overspending on renovations can eat into your profits.
- Focus on High-Impact Renovations: Prioritize improvements that add the most value, such as updating kitchens and bathrooms or boosting curb appeal. These areas generally offer the highest return on investment.
- Time the Market: Selling at the right time is key. Monitor local market trends and aim to sell when demand is high, especially during peak buying seasons.
- Know Your Buyers: Tailor your renovations to suit the preferences of your target market. For family areas, focus on space and practicality. For trendy neighborhoods, modern finishes and eco-friendly features can be a draw.
- Put it on the Market: Once renovations are complete, it is time to market! High-quality photos, staging, and listings on the right platforms will attract potential buyers.
FAQs on UK Property Flipping
There is no legal minimum or maximum time you must hold a property before flipping it. However, many investors tend to hold properties for at least 6 to 12 months to benefit from potential capital appreciation and minimise costs like Stamp Duty and Capital Gains Tax.
Yes, you can finance a property flip in the UK using a bridging loan135. Residential and buy-to-let mortgages are not designed for property flipping.
The average cost to flip a house in the UK is between £38,000 and £74,000, depending on the type of property, its condition, and the renovation work carried out.
If the property was your main residence for the entire duration of ownership, you may qualify for Private Residence Relief, potentially exempting you from CGT. Also, if your total gains are below the annual exempt amount, you will not pay CGT either.
Get Tax Advice from Legend Fusions
When it comes to property flipping, understanding and planning for taxes can truly flip the outcome of your investment. Instead of being surprised by the tax on flipping property UK, a well-thought-out approach helps you keep more of what you have earned. Plan with Legend Fusions’ proactive tax planning that gives you tax support throughout the year! With our strategies, you will be able to flip properties with confidence, knowing you have set yourself up for success!
Book a call with us now to get started!
Reviewed by:

Junaid Usman
Apart from being a partner at Legend Fusions, Junaid is an expert on Business Tax including business management advisory services which has proven in the growth of company. He is a promising advisor with an ideology; “Any business success depends on the level of objectivity it maintains.”