Its important that you understand the difference between Property Investing and Property Development


If you buy a house and rent it out to tenants that is property investing.

Your rental income is subject to your prevailing rate of tax be it 20%, 40%, or 45%

The GOOD NEWS is that you do not pay any national insurance on the income

When you sell the property if the selling price of the property less costs exceeds the Annual Allowance (£11,900 for 2013-14) you will have to pay capital gains tax currently at a tax rate of 18% or 28% depending whether the gain falls into the higher rate tax band or not.


If you buy a house, refurbish it, and sell it without renting the property to tenants that is classed as property development.

As a property developer you have to register your business with HMRC.

As a self employed person you would pay class 4 national insurance as well as income tax.

You may also have to register for the Construction Industry Scheme to deduct tax from your subcontractors.

You also have the option to set up as a Limited Company


The criteria for claiming expenses or not, particularly as a property investor, is open to interpretation so you would do well to take advice from your accountants
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