There is no single London city tax. Living, buying, or driving in the capital instead means dealing with several separate charges: Council Tax on your home, Stamp Duty Land Tax when you buy property, business rates if you occupy commercial premises, and the Congestion Charge and Ultra Low Emission Zone if you drive. What you pay depends on which borough you live in, what your property is worth, and how you use the city.
Council Tax on Your Home
Council Tax is the main local charge on residential property in England, set up by the Local Government Finance Act 1992. Liability follows a strict order: a resident with a freehold interest pays first, then leaseholders, then tenants, then licensees, then any other adult resident. Only people aged 18 or older count.1Legislation.gov.uk. Local Government Finance Act 1992 – Persons Liable to Pay Council Tax If the property is empty, the owner is liable. In houses in multiple occupation where tenants have separate contracts for individual rooms, the landlord picks up the whole bill.
Every home is placed in one of eight bands, A through H, based on what it would have been worth on 1 April 1991. Even brand-new builds are banded against that date, with the Valuation Office Agency estimating what they would have sold for back then.2City of London. Council Tax Bands and Charges Band D is the reference band councils use to compare rates.
Your bill has two parts. The larger portion goes to your borough, whichever of the 32 London boroughs or the City of London Corporation you live in, and pays for services like libraries, social care, and waste collection. The smaller portion is the Greater London Authority precept, added to every London bill. For 2026–27 the GLA precept is around £510 at Band D and funds the Metropolitan Police, London Fire Brigade, and Transport for London. Band D bills across London for 2026–27 range from about £1,030 in Wandsworth to over £2,600 in Kingston upon Thames, so the borough you live in matters enormously.
Discounts and Reductions That Cut Your Bill
Living alone knocks 25% off. The same discount applies if the other people in your home are “disregarded” for Council Tax purposes, a category that covers full-time students, student nurses, apprentices, certain care workers, and people classified as severely mentally impaired. A household where every resident is disregarded pays nothing.3GOV.UK. How Council Tax Works – Who Has to Pay
Full exemptions cover properties occupied only by full-time students, granny annexes used by elderly relatives, and homes left empty because the previous occupant has moved permanently into a care home. If your circumstances change, tell the council. Keeping a discount you no longer qualify for can bring a fine and a demand for repayment.3GOV.UK. How Council Tax Works – Who Has to Pay
Council Tax Reduction is a separate scheme for people on low incomes or benefits, run individually by each borough. Depending on your income, savings, household size, and the local rules, it can cut your bill by up to 100%.4GOV.UK. Apply for Council Tax Reduction
Second Homes and Empty Property Premiums
London boroughs can now charge steep premiums where a home is not someone’s main residence. From April 2025 councils gained the power to add a 100% premium to furnished second homes, effectively doubling the bill. Not every borough applies the full amount, but many London ones do.5GOV.UK. How Council Tax Works – Second Homes and Empty Properties
Empty properties are hit harder still. A home left unfurnished and vacant for at least a year triggers a premium, and the surcharge climbs the longer it stays empty. Properties empty for ten years or more can be charged up to four times the standard bill.5GOV.UK. How Council Tax Works – Second Homes and Empty Properties
Stamp Duty When You Buy
Anyone buying residential property in London pays Stamp Duty Land Tax on the price above certain thresholds. The tax is progressive: each rate applies only to the slice of the price within that band.6GOV.UK. Stamp Duty Land Tax – Residential Property Rates
- Up to £125,000: 0%
- £125,001 to £250,000: 2%
- £250,001 to £925,000: 5%
- £925,001 to £1.5 million: 10%
- Above £1.5 million: 12%
First-time buyers pay no SDLT on the first £300,000 and 5% on the portion between £300,001 and £500,000. If the price passes £500,000, the relief disappears entirely and standard rates apply.6GOV.UK. Stamp Duty Land Tax – Residential Property Rates Since average London prices comfortably exceed £500,000, most first-time buyers in inner boroughs pay standard rates.
Second Home and Non-Resident Surcharges
Buying an additional property adds 5% on top of every SDLT band, and that surcharge applies from the first pound rather than kicking in at £125,000.6GOV.UK. Stamp Duty Land Tax – Residential Property Rates
Non-UK residents pay a further 2% on top of everything else. You count as non-resident if you were not in the UK for at least 183 days during the 12 months before the purchase.6GOV.UK. Stamp Duty Land Tax – Residential Property Rates A non-resident buying a second London property faces the standard rate plus 5% plus 2%, a combined 7% extra on every band. On a £1 million flat, the surcharges alone add £70,000.
Business Rates on Commercial Property
Businesses occupying commercial premises pay Non-Domestic Rates, governed by the Local Government Finance Act 1988.7Legislation.gov.uk. Local Government Finance Act 1988 The Valuation Office Agency sets a “rateable value” based on estimated open-market rent, and that figure is multiplied by a centrally set rate.
For 2026–27 the multipliers are:8GOV.UK. Estimate Your Business Rates
- Rateable value below £51,000: 43.2p in the pound, or 38.2p for eligible retail, hospitality, and leisure businesses
- Rateable value £51,000 to £499,999: 48p in the pound, or 43p for retail, hospitality, and leisure
- Rateable value £500,000 or more: 50.8p in the pound
London businesses with a rateable value above £92,000 also pay the Crossrail Business Rate Supplement, an extra 2p in the pound that funds the Elizabeth line.9London City Hall. Paying for Crossrail: Business Rate Supplement The City of London Corporation can set its own additional premium for properties within the Square Mile.
Congestion Charge and ULEZ for Drivers
London runs two main driving charges, and they overlap.
Congestion Charge
The Congestion Charge applies to vehicles driven in central London, roughly the West End and financial district, at £18 per day paid in advance or on the day of travel. It runs 7am to 6pm on weekdays and noon to 6pm at weekends and bank holidays, with number plate cameras enforcing it. The only suspension is between Christmas Day and New Year’s Day. Electric vehicles registered for Auto Pay get 25% off, taking the charge to £13.50. You can still pay within three days after travel at a higher rate; after that, a £180 Penalty Charge Notice is issued automatically, reduced to £90 if paid within 14 days.
Ultra Low Emission Zone
The Ultra Low Emission Zone covers all of Greater London, a far larger area than the Congestion Charge zone. Cars, motorcycles, and vans that do not meet the emissions standards must pay £12.50 per day to drive anywhere inside the M25. The charge runs 24 hours a day, every day except Christmas Day.10Transport for London. ULEZ – Where and When Non-payment brings a £180 penalty, halved to £90 if paid within 14 days. Heavier vehicles like lorries and buses that fail separate standards can face Low Emission Zone charges of several hundred pounds per day.
A non-compliant vehicle driven through central London on a weekday can owe both charges. That is £18 plus £12.50, so £30.50 for one trip. Checking compliance on the TfL site before driving is worth the two minutes.
Non-Resident Landlord Withholding
If you own London rental property but live outside the UK, the Non-Resident Landlords Scheme requires tax to be withheld from your rental income before you receive it. A letting agent must deduct tax from the rent and pay it to HMRC quarterly, whatever the rental amount. If there is no agent and the tenant pays more than £100 a week, the tenant operates the scheme.11GOV.UK. What the Non-Resident Landlords Scheme Is
You can apply to HMRC for approval to receive rent gross, but only if your UK tax affairs are up to date and you either have no UK tax liability or don’t expect one for the year of application. Joint owners, including spouses, apply separately.11GOV.UK. What the Non-Resident Landlords Scheme Is The scheme year runs 1 April to 31 March, with quarterly deadlines in June, September, December, and March.
No Tourist Tax
Unlike Paris, Barcelona, or Amsterdam, London charges no tourist or hotel accommodation tax. Proposals have come and gone, including a recommendation from the London Finance Commission in 2013 that the Mayor be given the power to set one, and exploratory work by boroughs like Camden and Hackney, but any mandatory levy would need new primary legislation in Parliament. Visitors pay no city-level charge for staying in a hotel, though standard UK VAT applies to the room rate.