What is a realistic profit margin on a flip?

After all costs and tax, target a net profit margin of 10–15% of the ARV. Below 8%, the risk-reward is too tight. The £25–40k net profit range is typical for £150–250k flips when the numbers work.

— Free UK Property Tool —

Property Flip Profit Calculator

Q: What is the 70% rule in property flipping?

The 70% rule says your maximum purchase price should be 70% of the After-Repair Value minus your refurbishment costs. The 30% buffer covers all transaction costs plus the profit margin you need.

Q: Will HMRC tax my flip as Income Tax or Capital Gains Tax?

HMRC determines this based on activity. If you flip regularly or use bridging finance for short-term holds, HMRC will treat you as trading — taxed at full Income Tax rates up to 45%. Long-term investments held 12 months+ may qualify for CGT at 18%/24%.

Q: How much SDLT do I pay on a flip purchase?

All flip purchases pay the additional property SDLT surcharge: 5% on the first £125k, 7% on £125k–250k, 10% on £250k–925k. There is no exemption for short-term holds. On a £150,000 flip purchase, SDLT is £8,000.

Full deal analysis in one tool — gross and net profit, ROI on cash, annualised return, 70% rule check, break-even ARV. Includes bridging finance, refurb contingency, SDLT additional property surcharge, and CGT vs Income Tax modelling.

70% Rule Check Bridging Finance Refurb Contingency Annualised ROI CGT vs Income Tax Break-Even ARV

Deal Details

1 · Purchase

Purchase Price£

Cash purchase

No bridging finance — uses 100% equity

Bridging LTV% of purchase financed

Bridging Rate (annual)BTL bridging avg 9–12%

2 · Refurbishment

Refurb Budgetkitchen, bathroom, decoration

Contingency% of refurb — recommended 15%

Holding Periodpurchase to sale completion

3 · Sale

After-Repair Value (ARV)estimated final sale price

Selling Agent Fee% of sale, +VAT

Solicitor (Sale)typical £1,200–2,000

EPC + Other Selling Costs£

4 · Tax

Income Tax Band

Use CGT instead of Income Tax

CGT for long holds (12m+). Income Tax for trading flips.

↓ Methodology ↓

How this calculator works — formulas & sources

The 70% Rule

Max Purchase Price = (ARV × 70%) − Refurbishment Costs
ARV = After-Repair Value (estimated post-renovation sale price)

The 70% rule is a quick deal screening threshold. The 30% buffer must cover SDLT, bridging finance, legal fees on both sides, agent commission on sale, and your profit margin. Below the 70% threshold the deal has room to work; above it, risk increases significantly.

SDLT on Flip Purchase

SDLT = Banded calculation with 5% BTL surcharge across all bands
5% on £0–125k · 7% on £125–250k · 10% on £250–925k

All flip purchases attract the additional property surcharge — there is no exemption for short-term holds or development intent. SDLT is paid on purchase and cannot be reclaimed on sale.

Bridging Finance Cost

Bridging Cost = Loan × Monthly Rate × Hold Period (months)
Loan = Purchase Price − Deposit
Arrangement Fee = Loan × Arrangement % (typically 1–2%)

Bridging interest compounds monthly. The calculator uses simple interest for transparency. Total bridging cost includes arrangement fee plus monthly interest for the full hold period.

Net Profit

Gross Profit = Sale Price − Purchase Price − Refurb − All Costs
All Costs = SDLT + Bridging + Legal (buy) + Legal (sell) + Agent Fee
Net Profit = Gross Profit − Tax

Refurbishment contingency (default 10%) is added to the refurb budget automatically. Agent commission applies to the full sale price. Legal fees are estimated for both purchase and sale transactions.

CGT vs Income Tax

CGT (long holds 12m+): 18% basic / 24% higher rate
Income Tax (trading): up to 45% at additional rate
Annual CGT exempt amount: £3,000 (from April 2024)

HMRC determines classification based on activity pattern. Regular flippers using bridging finance for short-term holds are typically treated as traders — taxed at Income Tax rates. Hold 12+ months with clear investment intent and CGT may apply. Always confirm with a specialist accountant.

Annualised ROI

ROI = Net Profit ÷ Total Cash Invested × 100%
Annualised ROI = (1 + ROI)^(12 ÷ Hold Months) − 1
Total Cash Invested = Deposit + SDLT + Legal + Refurb

Annualised ROI allows fair comparison between flips of different durations. A 15% return on a 3-month flip annualises to 74% — far stronger than a 25% return on an 18-month project at 18% annualised.

Sources: HMRC SDLT guidance (October 2024 rates) · HMRC Capital Gains Tax rates (April 2024) · Finance Act 2003 (SDLT) · HMRC Business Income Manual BIM60000 (property trading)

Last reviewed: April 2026

Deal Results

Net Profit (after tax)

—

⬤ Calculating…

Returns

ROI on Cash

—

return on deposit

Annualised ROI

—

scaled to 12 months

Profit Margin

—

% of ARV

Cash Invested

—

total deployed

70% Rule Check

70% Rule —

—

Cost Breakdown

Break-Even Analysis

Break-Even ARV—

Margin of Safety—

Download the Full Excel Version

Includes scenario comparison, sensitivity analysis, 5-year deal tracker and full UK flip analysis guide.

Download — £14.99 →

How it works

What makes a flip work

Property flipping is profitable only when the numbers work before you buy. Here's what each metric tells you and where flips usually fail.

01 — THE 70% RULE

The investor's safety net

The 30% buffer covers SDLT, bridging interest, agent fees, solicitor and survey, holding costs, and the profit margin you actually need to make. Pay more than this and the deal is too tight to absorb mistakes. Cash buyers can stretch to 75%; novice flippers should stick to 65%.

02 — ANNUALISED ROI

The honest comparison metric

A 20% return on a 6-month flip is far better than 25% on an 18-month one. Annualised ROI scales the return to a 12-month basis so you can compare flips with different timelines. Strong flippers hit 30%+ annualised consistently.

03 — BRIDGING FINANCE

The hidden profit killer

Bridging loans run at 9–12% annually plus 2% arrangement fees and 1% exit fees. On a £100k loan over 6 months, that's £5,000 in interest plus £3,000 in fees — £8,000 gone before you sell. Cash buyers skip all of this, which is why cash deals can stretch the 70% rule to 75%.

04 — SDLT SURCHARGE

5% on the entire purchase

All flip purchases trigger the 5% additional property SDLT surcharge (since October 2024) because you already have or will have another property. On a £150k purchase that's £8,000 in stamp duty alone. There is no "I'll sell within 6 months" exemption — you pay it on completion.

05 — REFURB CONTINGENCY

Always 15% minimum

Property renovation costs overrun. Always. Damp behind the wall, electrics needing rewiring, hidden structural work — these get found mid-project. A 15% contingency on a £30k refurb is £4,500. First-time flippers should use 25%. The contingency in this calculator is added automatically to your refurb budget.

06 — INCOME TAX vs CGT

HMRC chooses, not you

If HMRC views your activity as trading (regular flips, finance structured for short hold, intent to sell), you pay full Income Tax — up to 45%. Genuine investment held over a year may qualify for CGT (18%/24%). Frequency, finance type, and intent all matter. The tax difference can be £20,000+ on a single deal.

FAQ

Common questions

What is the 70% rule in property flipping?

The 70% rule says your maximum purchase price should be 70% of the After-Repair Value (ARV) minus your refurbishment costs. The 30% buffer covers all transaction costs (SDLT, bridging, agent fees, solicitor, holding) plus the profit margin you actually need. Example: if ARV is £250,000 and refurb is £25,000, your maximum offer is £150,000. Pay more and the deal is too tight to absorb the inevitable surprises in renovation timing, costs, or final sale price.

Will HMRC tax my flip as Income Tax or Capital Gains Tax?

HMRC determines this based on activity, not your preference. If you flip property regularly (more than once or twice), use bridging finance designed for short-term holds, or buy with clear intent to sell quickly, HMRC will treat you as trading — taxed at full Income Tax rates (up to 45% plus National Insurance). Genuine long-term investments held 12 months+ with rental income may qualify for CGT (18% basic / 24% higher rate from April 2024) with a £3,000 annual exemption. The tax difference can exceed £20,000 on a single deal. Always consult an accountant before your first flip.

How much SDLT do I pay on a flip purchase?

All flip purchases pay the additional property SDLT surcharge: 5% on the first £125k, 7% on £125k–250k, 10% on £250k–925k, and so on. There is no exemption for short-term holds or "intended to sell" purchases. On a £150,000 flip purchase, SDLT is £8,000. On a £250,000 flip, it's £15,000. This is paid on completion and must be factored into your 70% rule calculation. The surcharge increased from 3% to 5% in October 2024.

What does "annualised ROI" actually mean?

Annualised ROI scales your return to a 12-month basis so you can compare flips with different timelines. A 20% return on a 6-month flip annualises to 44% — much stronger than a 25% return on an 18-month flip which annualises to only 16%. This is the metric experienced flippers focus on because it captures the velocity of your capital. Strong flippers hit 30–40%+ annualised consistently. Below 15% annualised, the risk usually doesn't justify the work.

How accurate is the bridging finance calculation?

The calculator uses interest-only bridging at the rate you specify, plus a typical 2% arrangement fee and 1% exit fee (3% total). Real-world variations: some lenders charge interest in advance (rolled up), some defer it until exit; arrangement fees vary 1.5–3%; exit fees can be 0–2%. The calculation here represents a typical mid-market bridging deal. For exact figures, get an Agreement in Principle from a bridging specialist before committing to a purchase.

What's a realistic profit margin on a flip?

After all costs and tax, target a net profit margin of 10–15% of the ARV. Below 8%, the risk-reward is too tight — any small overrun on refurb or undershoot on sale price wipes the profit. Above 15% margin and the deal is genuinely strong. The £25–40k net profit range is typical for £150–250k flips when the numbers work. Below £15k net, most experienced investors walk away.