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TonyTax
TonyTax, Tax Consultant
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I am a UK citizen, but not a UK resident (I left there in 1987).

Customer Question

I am a UK citizen, but not a UK resident (I left there in 1987). I wish to purchase some property in the UK for the short term purpose of letting the properties, with a longer term goal of selling for the appreciated value. My questions are here:

1:
If I bring funds into the UK to purchase the property(s) do I need to declare it as income and pay income tax on it? If I pay the seller or seller agent directly from my offshore bank account, is it considered the same as bringing it in?

2:
What tax would I need to pay on the rent I collect and can I deduct the letting agents fees?

3:
What happens about any capital gains realised when I later sell the property(s)? Do I need to pay tax on the profit?

Thanks.
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.

Hi.

1 As you are not UK resident and haven't been so for a long time, you will not be taxable in the UK on non-UK source income or on the money you use to invest in UK property. You are free to invest in the UK as is anybody from wherever they are in the world. Take a look here for information on stamp duty land tax.

2 As a UK national, you would be entitled to a personal allowance, currently £9,440, in you are under 65. This is the amount of income you can receive per UK tax year and pay no tax on. You would need to register as a non-UK resident landlord which may mean that your rent has to have tax deducted at source. You can read about the non-resident landlord scheme and how you may qualify for no tax deduction at source here. Take a look here for information on the types of expenses you can claim against your rental income.

3 Currently, gains made by non-UK residents on the disposal of non-business assets are not subject to Capital Gains Tax in the UK. However, from 6 April 2015, the UK government plans to bring in legislation so that gains made on UK residential property by non-UK resident landlords will be subject to CGT. However, whilst the detail has yet to be decided on, it is likely that only gains accruing from 6 April 2015 to the date of disposal will be subject to UK CGT. There is some information on that here.

I hope this helps but let me know if you have any further questions.

Customer: replied 3 years ago.

Thanks for the info Tony, just 1 further question, how would all of this change if I became a UK resident after purchasing any properties? There's a chance I may live in one of the units, and what would actually make me a UK resident? Thanks.

Expert:  TonyTax replied 3 years ago.
The UK tax residency rules changed with effect from 6 April 2013. You can read the detail here or a brief synopsis here. A helpful flowchart for "arrivers" can be found here.

If you were rsident in the UK, you would be liable to UK tax on all your worldwide income with credit being given for foreign tax paid, if appropriate.
Customer: replied 3 years ago.

Tony,


 


Just 1 final clarification point. If I became a UK resident, would I be taxed on worldwide income from the day I became a resident onwards until "leaving" or would I be liable for taxes on worldwide income retroactively from my residency date?

Expert:  TonyTax replied 3 years ago.

The year that you arrive in the UK will be a split year. Basically, you will be liable to UK tax on worldwide income earned or received after your arrival in the UK. See the notes on "split years" here.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15841
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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Expert:  TonyTax replied 3 years ago.
Thanks for accepting my answer.

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