UK specific taxes in 2026: VAT, stamp duty and IHT, and how to pay less

Last reviewed: November 2026 · Reviewed by Stéphane Gombauld, tax expert, technologist and digital nomad

You know about UK income tax. But the bills that surprise newcomers are usually the other ones: VAT on your invoices, stamp duty on a flat, inheritance tax on your estate. After reading, you'll know each one's 2026 rate, when it hits you, and how to reduce it legally.

United Kingdom specific taxes in 2026: the key figures

Is this guide for you?

Read on if you…

• invoice clients from the UK and wonder when VAT applies;
• plan to buy a home or an investment flat in England or Northern Ireland;
• hold UK assets and want to understand inheritance tax.

Probably not your case if you…

• only want the income tax or National Insurance picture – start with the UK tax landscape overview;
• sell shares or crypto at a profit – that's capital gains tax in the UK.

When do you have to charge VAT in the UK?

VAT is a tax on what you sell, collected by you and paid to HM Revenue & Customs (HMRC). You must register once your taxable turnover passes £90,000 in any rolling 12-month period. You can deregister below £88,000.

Here's the catch. The test is rolling, not by tax year. Check it every month, not every April.

Rates

• 20% standard rate: most goods and services, including consulting and software.
• 5% reduced rate: home energy, children's car seats, some home renovations.
• 0% zero rate: most food, books, children's clothes, exports of goods.

Services to foreign clients

If you sell services business-to-business to a client outside the UK, the place of supply – the country where VAT is due – is usually the client's country. So you don't charge UK VAT. You still count these sales toward some thresholds, so keep clean records.

Voluntary registration

Below £90,000 you can still register. It makes sense if your clients are VAT-registered businesses. You reclaim VAT on your laptop, software and co-working, and your clients reclaim what you charge them.

The Flat Rate Scheme lets small businesses pay a fixed percentage of turnover instead. Limited cost traders pay 16.5%, which rarely pays off for freelancers with few expenses.

How much stamp duty do you pay on a UK property?

Stamp Duty Land Tax (SDLT) applies in England and Northern Ireland. Scotland charges Land and Buildings Transaction Tax and Wales charges Land Transaction Tax, with their own bands.

Since 1 April 2025, residential SDLT works in slices, like income tax:

First-time buyers pay 0% up to £300,000 and 5% up to £500,000. Above £500,000 the relief disappears.

The two surcharges that hit mobile people

• Higher rates for additional dwellings: +5% on every slice if you already own a home anywhere in the world. Yes, a flat in Lisbon counts.
• Non-resident surcharge: +2% if you weren't present in the UK for at least 183 days in the 12 months before buying.

The two stack. A non-resident buying a second home can pay 7 points above the standard rates.

Good news: if you become UK resident within the following year, you may reclaim the 2% non-resident surcharge.

How does UK inheritance tax work for newcomers?

Inheritance tax (IHT) is 40% on the value of an estate above £325,000. The residence nil-rate band adds up to £175,000 when a home passes to children or grandchildren. Both bands are frozen until April 2031.

Since 6 April 2025, exposure depends on long-term residence, not on domicile. You're in scope on worldwide assets once you've been UK resident for 10 of the previous 20 tax years. Before that, only your UK assets are taxed.

Here's the catch for leavers. Once long-term resident, you stay in scope for between 3 and 10 years after leaving, depending on how long you lived in the UK.

Ways to reduce it legally

• Gifts to anyone are outside IHT if you survive 7 years.
• Each spouse or civil partner has their own bands; unused bands pass to the survivor.
• Business and agricultural relief give 100% relief up to a combined allowance, then 50% above it.
• From April 2027, unused pension funds fall into your estate.

Which smaller taxes should you budget for?

• Stamp duty on shares: 0.5% on purchases of UK company shares. Shares on AIM and most ETFs domiciled abroad are exempt.
• Council tax: a local tax on homes, banded by value. Single occupants get 25% off.
• ATED: the Annual Tax on Enveloped Dwellings, for companies owning UK homes worth over £500,000.
• Insurance Premium Tax: 12% on most insurance, 20% on travel insurance.
• Vehicle excise duty: electric cars have paid it since April 2025.
• Fuel duty: 52.95p per litre, with the 5p cut being phased out during 2026.

If you hold crypto, the transaction taxes are minor; the income and gains rules matter more. See crypto taxes in the UK.

Common mistakes (and what they cost)

• Missing the rolling VAT test → late registration. You owe 20% VAT on past sales, out of your own pocket, plus penalties.
• Forgetting foreign property when buying in the UK → a 5% surcharge you didn't budget for, and penalties if you under-declare.
• Buying before arriving → a 2% non-resident surcharge that a few months' wait could avoid.
• Ignoring IHT after leaving → your worldwide estate can stay in scope for up to 10 years.
• Charging UK VAT to foreign business clients → overcharging clients who may not be able to reclaim it.

Frequently asked questions

What is the VAT threshold in the UK in 2026?

You must register for VAT once your taxable turnover goes over £90,000 in any rolling 12-month period, or if you expect to pass it in the next 30 days alone. You can deregister if turnover drops below £88,000. You can register voluntarily below the threshold, which often helps freelancers who mainly sell to VAT-registered businesses.

Do non-residents pay more stamp duty in the UK?

Yes. Non-resident buyers of residential property in England and Northern Ireland pay a 2% surcharge on top of standard SDLT. You count as non-resident if you weren't in the UK for at least 183 days in the 12 months before buying. If you already own a home elsewhere, the 5% additional-dwelling surcharge applies too.

Does owning a home abroad affect UK stamp duty?

Yes. The higher rates for additional dwellings apply if you own a residential property anywhere in the world worth £40,000 or more at the time of purchase. That means a 5% surcharge on top of every slice of standard SDLT. Selling or replacing your main home within the time limits can avoid or refund it.

When does UK inheritance tax apply to foreigners?

Since April 2025, it depends on long-term residence. If you've been UK resident for at least 10 of the last 20 tax years, your worldwide estate is in scope. Before that, only UK assets are taxed. A UK home is always in scope, whoever owns it, at 40% above the available nil-rate bands.

Is there a wealth tax in the UK?

No. The UK has no annual wealth tax on net assets. It does tax wealth at transfer points: inheritance tax on death and some lifetime gifts, capital gains tax on disposals, and stamp duties on purchases. A high-value council tax surcharge on homes over £2 million is planned from April 2028.

Do I pay stamp duty on ETFs in the UK?

Usually not. Stamp duty and SDRT at 0.5% apply to shares in UK-incorporated companies. Most ETFs are domiciled in Ireland or Luxembourg and are exempt. Shares on AIM, the junior London market, are also exempt. Buying a UK-listed blue-chip share, however, costs 0.5% stamp duty on top of the price.

Related guides

• UK tax landscape overview: every tax in one page
• Capital gains tax in the UK: rates and allowances
• Tax incentives for expats and digital nomads in the UK
• How to become UK tax resident, step by step
• Crypto taxes in the UK
• Specific taxes in Ireland, for comparison
• Specific taxes in Canada, for comparison
• All country tax guides

Sources

• HMRC – VAT rates (GOV.UK)
• HMRC – VAT registration (GOV.UK)
• HMRC – Stamp Duty Land Tax (GOV.UK)
• HMRC – Inheritance Tax (GOV.UK)
• UK legislation – Finance Acts (legislation.gov.uk)
• PwC Worldwide Tax Summaries – United Kingdom

This guide is general information, not personalised tax advice. See how we research and review.