Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Anonymous,MyNameIsUrl,6Tricia,staffordian, for Donating to support the site

UK property investment as future expat

Financial discussion for any financial queries for Expats
bofh
Posts: 37
Joined: March 20th, 2017, 4:29 pm
Has thanked: 31 times
Been thanked: 14 times

UK property investment as future expat

#401977

Postby bofh » April 6th, 2021, 10:35 am

Hi,

I'm currently a UK resident considering to buy an apartment as a long term investment. Later this year I will likely become ex-UK-tax-resident for the long-term so would be looking to purchase beforehand (and benefit from the stamp duty holiday). Purchase price would be max 200k, assuming no loans/mortgage. Alternatively, I could go for something more expensive subject to a mortgage paid by the net rental income. I would need to factor in property management costs as I would not be physically local to manage it myself. At this stage, I'm not limiting my choices to a particular area of the UK - all options on the table.

I''m aware that I could either purchase this privately or create a BTL LTD. Either way I'd need to investigate the local country taxes in Hungary for owning "foreign property", whether personally or via a LTD (the LTD would be seen in-country as "foreign controlled" if I'm a Director of it).

Given the above scenario, are there any particular gotchas I should be aware?

TIA
-b

torata
Lemon Slice
Posts: 386
Joined: November 5th, 2016, 1:25 am
Has thanked: 129 times
Been thanked: 139 times

Re: UK property investment as future expat

#401983

Postby torata » April 6th, 2021, 11:12 am

I don't know if this is a gotcha or not. And it's second hand info. But hopefully others will chip in.

An expat I know with maybe 4 BTL in the UK became a 'registered non-resident landlord' (or something similar) with HMRC.
He's extremely sharp nosed about money, and I have the impression he chose to register rather than having to do it, so he must have seen a benefit in it. My memory, which could be completely off, is that it allowed him to offset the tax he had to pay locally on the income received against similar taxes in the UK, as there is no dual taxation treaty between the countries covering rental income.
In return he got a 12-digit UK personal tax identification number, presumably for automatic exchange of information purposes.

torata

PinkDalek
Lemon Half
Posts: 6204
Joined: November 4th, 2016, 1:12 pm
Has thanked: 1651 times
Been thanked: 1797 times

Re: UK property investment as future expat

#402031

Postby PinkDalek » April 6th, 2021, 2:14 pm

torata wrote:... An expat I know with maybe 4 BTL in the UK became a 'registered non-resident landlord' (or something similar) with HMRC.


Some detail here for starters:

Paying tax on rent on behalf of landlords who are abroad
https://www.gov.uk/guidance/paying-tax-on-rent-to-landlords-abroad.

Paying Corporation Tax if you’re a non-resident company landlord
https://www.gov.uk/guidance/paying-corporation-tax-if-youre-a-non-resident-company-landlord

Forms for non-resident landlords
https://www.gov.uk/government/collections/non-resident-landlords-forms

The last one leads to:

https://www.gov.uk/government/publications/non-resident-landlord-application-to-have-uk-rental-income-without-deduction-of-uk-tax-individuals-nrl1

https://www.gov.uk/government/publications/non-resident-landlord-application-to-receive-uk-rental-income-without-deduction-of-uk-tax-companies-nrl2


bofh wrote:... (and benefit from the stamp duty holiday). Purchase price would be max 200k, ...


I'm no expert but, depending on your situation, is not the Higher rates for additional properties You’ll usually have to pay 3% on top of SDLT rates if buying a new residential property means you’ll own more than one. from https://www.gov.uk/stamp-duty-land-tax/residential-property-rates potentially applicable? Then see the SDLT calculator https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro.

Lootman
The full Lemon
Posts: 11242
Joined: November 4th, 2016, 3:58 pm
Has thanked: 143 times
Been thanked: 2489 times

Re: UK property investment as future expat

#402037

Postby Lootman » April 6th, 2021, 2:24 pm

bofh wrote:I'm currently a UK resident considering to buy an apartment as a long term investment. Later this year I will likely become ex-UK-tax-resident for the long-term so would be looking to purchase beforehand (and benefit from the stamp duty holiday).

This was a while ago but a friend of mine was a UK landlord who was resident in Cyprus. At one point HMRC instructed his UK tenants to withhold tax from their rent payments and pay them directly to the taxman. Needless to say this caused a lot of friction between landlord and tenants.

No idea if that is still the case but it seems logical that if HMRC is struggling to get someone overseas to pay tax on UK rental income then they might take such aggressive steps to enforce collection. I guess ultimately they might even try and place a charge against the property or seize it.

Personally if I become successfully non-resident for UK tax purposes I would not want to own any UK assets and remain subject to UK tax, stamp duty holiday or not.

bluedonkey
Lemon Slice
Posts: 886
Joined: November 13th, 2016, 3:41 pm
Has thanked: 455 times
Been thanked: 291 times

Re: UK property investment as future expat

#402042

Postby bluedonkey » April 6th, 2021, 2:36 pm

The potential 20% withholding tax for non-resident landlords is not a big issue. There's a straightforward application process and almost invariably HMRC agrees to no deduction. The NRL has to be in the self assessment tax system in order for HMRC to agree. Most property letting agents are familiar with the application process and perform it on behalf of the landlord. If a deduction is made, then this is like PAYE and full credit for the tax withheld is obtained via the annual self assessment tax return. Downside is cashflow timing.

This NRL withholding tax should not be confused with any UK-Hungary double tax issues - an area I'd rather not comment on for the sake of my sanity!

Wordchild
Posts: 15
Joined: November 14th, 2016, 1:05 pm
Has thanked: 2 times
Been thanked: 4 times

Re: UK property investment as future expat

#403416

Postby Wordchild » April 11th, 2021, 3:08 pm

There are a whole range of tax efficient investment opportunities available to non resident expats: owning a UK property is definitely not one of them.
Take some time and do your research.
Personally speaking I can never understand why on earth a UK expat , who wanted to maximize the advantages of their situation , would want to invest and (presumably ) receive income from UK property.
It’s a little like not wanting to let go of mama!

bofh
Posts: 37
Joined: March 20th, 2017, 4:29 pm
Has thanked: 31 times
Been thanked: 14 times

Re: UK property investment as future expat

#403923

Postby bofh » April 13th, 2021, 3:46 pm

Wordchild wrote:There are a whole range of tax efficient investment opportunities available to non resident expats


Wordchild wrote:Take some time and do your research.


I'm all ears...where would you suggest I start?

Wordchild
Posts: 15
Joined: November 14th, 2016, 1:05 pm
Has thanked: 2 times
Been thanked: 4 times

Re: UK property investment as future expat

#404546

Postby Wordchild » April 15th, 2021, 4:29 pm

First, my comment was not aimed at your personal situation. I was making a general point ie that investing in physical U.K. property is not (in most cases) a particularly tax efficient investment for many expats.
As I said , everyone needs to start by understanding and exploring the opportunities afforded for them in their new situation . Also so many individual variances come into play, eg domicile situation, tax situation in your new country ,intention to return to the U.K. long term etc etc
Properly structured, many/ most expats should be able to enjoy a higher, after tax, investment return than they would have enjoyed as a U.K. tax resident.

Eg if you want property exposure, how about a Singapore REIT, wide choice of Geography and property types available and pretty tax efficient for most expats. Several other advantages as well eg less personal effort on your part access to greater diversity, to name just a couple.


Return to “International & Expat Investors”

Who is online

Users browsing this forum: No registered users and 1 guest