Key UK taxes
Key UK taxes
Capital Gains Tax:
Capital gains tax (CGT) now applies to non-residents disposing of UK residential property, with some exceptions, on gains arising on disposals after 5 April 2015.
Before then, CGT did not apply to non-residents, other than those carrying on a trade in the UK and, since April 2013, on companies subject to the 'annual tax on enveloped dwellings' (ATED) charge.
The extension of the CGT charge is intended to harmonise the UK system with other jurisdictions that charge tax on the basis of where the property is located rather than where the owner is resident.
For residential property held on 6 April 2015 and disposed of on or after that date, the 'default' position will be for the gain on disposal to be on the excess over the market value at 5 April 2015.
The charge applies to rental properties as well as those 'owner-occupied'
Note: CGT is a complicated area of taxation and it is essential to seek professional advice – we work closely with a number of excellent tax advisors – please ask us for a recommendation
When a property is in receipt of rental income from a UK property the income is within the scope for a tax. A letting agent collecting rent on behalf of an overseas landlord is obliged to collect this tax (individuals are taxed on banded rates starting from 20% of the rent). However, to avoid this an application can be made by the landlord to HMRC for a non-residential landlord exemption number. Once a letting agent has this they can pay over the full rent amount. It is possible to reduce the income tax exposure by including interest payments on loans. This is a complicated issue and further professional advice should be sought.