If you’re considering investing in UK real estate, it’s crucial to understand the local tax landscape. Allenby Accountants is one of the highly-specialised small accountancy firms in London that can guide you through the intricacies of UK property tax laws, ensuring that you optimise gains and minimise taxes.
In this blog, we will share key information about UK property taxes you should know as a non-resident to help you make informed choices.
Can you buy property in the UK?
Yes. There are no legal restrictions preventing non-residents from buying property in the UK. While you don’t need a visa to start investing, you should still get one if you want to visit and live in the property. Be prepared to go through meticulous identity checks and make sure you have all the necessary documents.
Property taxes for non-UK residents
The HMRC (UK’s tax authority) imposes property taxes on all individuals and businesses, including non-residents involved in buying, renting, owning, selling, or developing properties in the UK.
- SLDT (Stamp Duty Land Tax) – Non-residents buying property in Northern Ireland and England must pay SDLT on purchases above a certain value. This applies to freehold and leasehold properties, shared ownership schemes, and property exchanges involving payment. Notably, non-residents pay an additional 2% SDLT.
- Corporation tax – As of April 6, 2020, non-UK resident companies earning from UK properties are subject to Corporation Tax, replacing the previous income tax requirement. This includes investments through collective investment vehicles.
- Income tax – Non-resident landlords receiving rental income from UK properties must register with HMRC and are taxed at marginal rates ranging from 20% to 45%.
- Inheritance tax (IHT) – Inheritance Tax (IHT) applies to UK-based assets inherited by non-residents, but only for estates exceeding £325,000. This threshold is known as the Nil Rate Band.
- Capital gains tax (CGT) – CGT is levied on profits from selling UK properties, with non-residents required to report and pay taxes on disposals within 60 days of the sale.
- ATED (Annual Tax on Enveloped Dwellings) – ATED targets companies that own UK residential properties valued over £500,000, which is applicable to both residents and non-residents.
Do you need more advice on property taxes?
For more personalized advice on navigating UK property taxes as a non-resident, consider partnering with small accountancy firms in London that specialise in accounting for real estate investors.
Allenby Accountants offers bespoke guidance to help you manage your property investments efficiently. Contact us at 0208 914 8887 to consult with our chartered tax accountants and streamline your tax planning strategy.
