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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5116
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
Type Your Tax Question Here... is online now

I am a non resident of the UK,looking at potentially

Customer Question

I am a non resident of the UK,looking at potentially acquiring a property in ther \\
Assistant: Thank you. Can you provide any more details to help us find you the right Expert?
Customer: The property is currently let out to a local council.What is the better option,to incorporate a company for the acquisition,or in personal name?How can I minimise tax exposure to the rental income and future capital gains on disposal?
Submitted: 1 year ago.
Category: Tax
Expert: replied 1 year ago.

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.

Expert: replied 1 year ago.

Thank you for your question..

Please advise -

do you have other income arising in the UK?

will this be the only property in your portfolio?

many thanks

Customer: replied 1 year ago.
I currently have no other income in the UK.Am only consideirng this potential property
Expert: replied 1 year ago.

Thank you for your reply.

Property income is chargeable to UK income tax/Corporation tax irrespective of your residency status.

In honesty, changes to CGT rules pertaining to residentail properties held by non resident landlords means you can't avoid capital gains tax if there is a gain on eventual sale.

As far as income tax goes, here again you can't escape it. You are taxed on the net income after allowable expenses to cover repairs and maintenace, insurances, letting agent and other professional fees, etc.

There is little to choose between holding one property in the name of LTD company or in your own name.

As far as capital gains tax goes, as a LTD company your gain would be taxed at corporation tax rate of 20% (current rate) and there is no gains annual allowance available to companies.

Individuals would pay CGT at the rate of 18%, 28% or a combination of both depending on the taxable income including the gain in the year of sale. Individuals get gains annual allowance before calculating CGT payable.

I have provided you with an outline of where you would stand in terms on taxation on rental income and capital gain.

I hope this ishelpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 1 year ago.
I intend to borrow to purchase the property,will the interest paid on borrowing be allowable expense against rental income in the year?
Expert: replied 1 year ago.

Thank you for your reply.

As this is your only income in the UK, it is likely to be within the threshold of basic rate tax at 20%.

In that case the whole interest payable would also be allowable at same rate in arriving at profit for tax calculation.

I hope this is helpful.

Customer: replied 1 year ago.
Asa non resident,is all the income,less interest and other expenses,chargeable ,or do I get an annual allowance?
Customer: replied 1 year ago.
what about CGT?Is there an annual allowance?indexation allowance?
Expert: replied 1 year ago.

Thank you for your reply.

Here is a link to HMRC website that clarifies who is entitled to UK personal allowance for income tax

For CGT you will get a gains allowance (current year £11,100). there is no indexation allowance.

Expert: replied 1 year ago.

Hi there

Just checking to see if you need further clarification on any points raised or I have answered your question.

Many thanks