Question 1

Is property flipping treated as trading or capital gains for UK tax?

Accepted Answer

HMRC treats repeated flipping as a trade, so profits are subject to Income Tax and Class 4 NI (up to 47% combined) rather than CGT. One-off flips might qualify as CGT (24% higher rate on residential gains), but factors like frequency, finance structure, and intent determine the classification under the badges of trade.

Question 2

What costs should I include when calculating flip profit?

Accepted Answer

Include: purchase price, SDLT (usually with 5% surcharge if you own other property), solicitor fees, survey, mortgage/bridging interest and product fees, refurbishment costs, utilities/council tax during works, insurance, agents selling fee (1-3% + VAT), and solicitor on sale. Contingency of 10-20% on refurb budget is prudent.

Question 3

What is the 70% rule in property flipping?

Accepted Answer

US-origin rule of thumb: maximum purchase price = (After Repair Value x 70%) minus refurb cost. It leaves a 30% margin for holding costs, selling fees and profit. UK flippers often tighten this to 65-75% depending on area-specific selling costs (SDLT on purchase, agent and solicitor on sale typically consume 7-10%).

Question 4

Can I use a bridging loan for a flip?

Accepted Answer

Yes, bridging is common for sub-6-month flips where a standard BTL mortgage is not feasible. Expect 0.55-1.0% per month interest, 1-2% arrangement fee, and 1% exit fee. Total finance cost on a 6-month bridge at £200k LTV often runs £10k-£15k, which must be modelled into the profit before committing.

Question 5

Do I need planning permission for a flip refurb?

Accepted Answer

Most cosmetic and internal works fall under permitted development and need no permission. Extensions, loft conversions and change of use often require full planning (8-13 weeks) or a lawful development certificate. Building Regulations approval is separate and required for structural, electrical, heating and insulation works regardless of planning status.

Question 6

How long do flips typically take?

Accepted Answer

Allow 2-4 weeks for purchase (or 6-12 weeks with a mortgage), 6-16 weeks of works depending on scope, 4-8 weeks to find a buyer, and 8-12 weeks conveyancing. Total 6-12 months end to end is typical; bridging finance tends to cap at 12 months so cost overruns or slow sales can squeeze margins severely.

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