Non-Resident Property Tax: A Guide for Foreign Owners
Non-resident property tax owners, who live or work overseas while owning and letting property in Britain, can rely on our assistance in managing the complexities of filing a UK tax return.
Being a non-resident property owner in the UK doesn't have to be a source of stress when dealing with Non-Resident Property Tax
Imagine having the opportunity to…
- An easier procedure
With our dedicated team of property tax advisors, you can leave the task of filing your tax returns behind. No more concerns about grappling with UK tax laws. Instead, you’ll have a single point of contact—an ally with an extensive grasp of property taxes.
- Reduced concerns with HMRC
We not only manage your UK tax return but also address any inquiries from HMRC, ensuring a smooth and worry-free process. You can rely on us to safeguard your interests and simplify matters if HMRC initiates an investigation.
- Increase the funds in your bank account
Apart from securing all eligible relief and allowances, our extensive tax expertise and strategic planning will keep your tax bill in check.
Uncover your deductible expenses as a property owner.
Frequently Asked questions
If you reside outside the UK and earn rental income, it is necessary to file a tax return. In the case of jointly owned properties, each owner is required to submit a tax return, regardless of whether any tax is owed.
For individuals who have not yet enrolled for self-assessment, they can complete form NRL1i. Once you submit NRL1i, HMRC will not only register you but also inform your letting agent (if applicable) or your tenant about your registration. Typically, unless specified otherwise, if your letting agent or tenant adheres to the rules correctly, they will deduct 20% from the rental payment and remit it to HMRC. To reclaim this deduction, you will need to file a tax return. Registering under the Non-resident Landlord scheme does not exempt you from Income Tax; instead, it signifies that the letting agent or tenant is not obligated to deduct tax at the source.
If your travel to the UK is exclusively for your letting business, it can be considered an allowable expense. However, if you've enlisted a letting agent to manage your property, this generally doesn't apply. According to HMRC, when a letting agent manages your property, it's considered managed from their business location. Therefore, only travel from the letting agent's office to the rental property is eligible for coverage in this case.
If you're not using a letting agent, your travel costs to the UK for property management or other letting-related purposes may be eligible for reimbursement. However, it's important that your visit doesn't have a dual purpose involving personal elements.
Example 1:
Suppose you stay in the UK for two weeks, handling tenant changes while also visiting friends and family. In accordance with the duality of purpose rules, the entire travel cost would be disallowed.
Example 2:
On another note, if you visit the UK for two days, exclusively dealing with letting matters like tenant changeovers, and you stay in a hotel and have a meal during your trip, you can claim these expenses as long as you retain receipts.
Income generated from rental properties in the UK is subject to taxation within the UK. The availability of the UK personal tax allowance depends on your nationality and place of residence. Furthermore, your country of residence may also impose taxes on your UK rental income. Therefore, it is advisable to seek guidance from a qualified advisor in your country of residence.
Many countries have established double tax treaties with the UK, aiming to provide relief from dual taxation. Nevertheless, rental income from the UK typically incurs taxation both in the UK and your country of residence. Some tax treaties between the UK and other nations may exempt certain UK income from UK taxation.
Individuals whose "usual place of abode" is outside the UK can be subject to UK rental income taxation under the Non-Resident Tenant Scheme. HMRC mandates that non-resident tenants register under the Non-Resident Tenant Scheme, which can now be conveniently completed online using form NRL1i. After registration, HMRC will provide you with a unique tax reference (UTR) for self-assessment tax return filing. Upon registration with HMRC, your landlord or property manager will also receive notification.
In the absence of registration, your landlord or property manager is obligated to withhold 20% of the rent and remit it to HMRC. However, upon filing your tax return, you can request a refund for this deduction. Registering as a non-resident tenant still subjects you to Income Tax, but landlords and property managers are not required to withhold it.
If you are not a UK resident and your estate exceeds £325,000, minus any gifts made in the previous seven years, you will be subject to UK inheritance tax.
Individuals with non-domicile status in the UK will only have inheritance tax obligations for their assets located in the UK.
For the tax years 2021/22 to 2025/26, the United Kingdom offers a personal tax allowance of £12,570, which applies to British nationals regardless of their place of residence. This same tax allowance and potential deductions are also accessible to residents of countries within the European Economic Area (EEA).
The EEA includes the following nations: Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.
Additionally, you can claim a personal allowance if you fall into one of the following categories:
- You are a Jamaican or Israeli national.
OR
- You are a resident and a national of any of the following countries: Argentina, Australia, Azerbaijan, Bangladesh, Belarus, Bolivia, Bosnia and Herzegovina, Botswana, Canada, Cote d'Ivoire, Croatia, Egypt, Gambia, India, Indonesia, Japan, Jordan, Kazakhstan, Korea, Lesotho, Malaysia, Malta, Montenegro, Morocco, New Zealand, Nigeria, Oman, Pakistan, Papua New Guinea, Philippines, Romania, Russian Federation, Serbia, South Africa, Sri Lanka, Sudan, Switzerland, Taiwan, Tajikistan, Thailand, Trinidad & Tobago, Tunisia, Turkey, Turkmenistan, Uganda, Ukraine, Uzbekistan, Venezuela, Vietnam.
(Note: Entitlement to benefits may be protected under the UK's Double Taxation Treaty with the former Yugoslavia until a new agreement is in effect for certain countries marked with an asterisk).
Before April 5th, 2015, non-residents were not required to pay Capital Gains Tax (CGT). However, starting from April 6th, 2015, CGT became applicable to all non-residents, and from April 6th, 2019, all gains from commercial property also became subject to CGT. It is now possible to substitute the market value on the relevant date for the original cost of residential or commercial property owned on April 5th, 2015, or April 5th, 2019, respectively.
For instance, consider Shane, who purchased an investment flat in Kensington for £500k in 2000. When Shane left the UK on April 5th, 2015, the flat was valued at £1.5m. Its current value is now £2m, and Shane is contemplating selling it. Initially, Shane would have a gain of £1.5m (£2m minus £500k). However, he now has the option to use the value as of April 5th, 2015, as his base cost. Consequently, his gain would be reduced to £2m minus £1.5m, resulting in a reduction of £1m.
HMRC must be notified of the gain within 30 days of completing the sale, and Capital Gains Tax must also be paid within the same 30-day period.
set these losses against other rental profits. Instead, you can only carry forward these losses to offset against future rental profits earned from the same tenant.
If you possess another property, regardless of its location, the 3% higher rate SDLT will be applicable to you.
Starting from April 6, 2020, you must submit an online disclosure and settle any Capital Gains Tax (CGT) obligations within a 30-day period.
For more comprehensive information, please consult the guide on non-resident capital gains tax.
With the increasing intricacies involved, limiting your stay in the UK to just a few days is no longer a straightforward matter. Given the complexity, we strongly advise seeking professional guidance.
Fees for Single Owner
One Property
Single Owner
- Simplified tax filings for non-UK residents owning a sole UK rental property, offered at a straightforward fixed cost.
- Contact us to get a fixed fee quote
Two Properties
Single Owner
- We handle tax filings for individuals living outside the UK who own two flats or houses in Britain, considering available reliefs and allowances.
- Contact us to get a fixed fee quote
Three Properties
Single Owner
- Our precise tax return service extends to individuals residing abroad who manage a portfolio of three UK properties.
- Contact us to get a fixed fee quote
Four properties
Single Owner
- If you have four or more properties in your portfolio, it's probably time to consider a comprehensive tax strategy. Our experts will collaborate with you to ensure you have the appropriate ownership structure in place and are capitalizing on available tax reliefs and allowances to manage your tax liability effectively.
- Contact us to get a fixed fee quote
Fees for Joint Owner
One Property
Joint Owner
- Simplified tax filings for non-UK If you reside overseas and co-own a flat or house in the UK, we'll handle both tax filings.
- Contact us to get a fixed fee quote
Two Properties
Joint Owner
- If you and your partner who own properties abroad and have two rental properties require a tax solution, this package is tailored for you.
- Contact us to get a fixed fee quote
Three Properties
Joint Owner
- A fixed fee for tax returns on three UK rental properties owned by two non-residents, ensuring minimal hassle for you.
- Contact us to get a fixed fee quote
Four properties
Joint Owner
- When you have four or more properties in your portfolio, it's time for a comprehensive tax strategy. Our specialists will collaborate with you to ensure you have the appropriate ownership framework and are leveraging available tax benefits and deductions to effectively manage your tax liabilities.
- Contact us to get a fixed fee quote
For Non-Resident Property Tax concerns, our services are custom-tailored to your specific requirements if...
As a Non-Resident Property Tax holder living overseas, you own property in the United Kingdom
If you are a Non-Resident Property Tax owner, whether residing or working overseas, you are obligated to submit a UK tax return. Adding to the intricacy, non-resident property owners must file a paper return by the 31st of October following the conclusion of the tax year.
Your tax liability in the UK appears to be significant
When it comes to Non-Resident Property Tax, there are no shortcuts or methods to bypass the complex calculations needed for substantial tax savings. To guarantee precise payment, the guidance of a committed Non-Resident Property Tax accountant is indispensable, and that’s precisely where we step in.
You plan to acquire more properties in the UK, considering Non-Resident Property Tax
If you’re aiming to build an extensive property portfolio in one of the world’s most dynamic real estate markets, we can offer professional guidance on business structures, tax strategy, and navigating the complexities of the UK tax system.