The UK is primarily one of the most preferred destinations for property investment. The option to benefit from rental income and capital appreciation makes it an attractive package for investors worldwide. However, a question that continues to haunt non-residents is whether they can buy properties in the United Kingdom or not, but there is no need to worry. Of course, non-residents can buy UK properties as there are no legal restrictions on non-residents. However, from April 2021, a new Stamp Duty Land Tax (SDLT) surcharge applies to non-UK property buyers. There are also quite a few things that you must know if you are a non-resident and planning to buy a property in the United Kingdom. However, first of all, you must know who is a non-resident in the UK.
Non-resident in UK
There is a popular perception that a person is a non-resident of UK if he is not physically present in the United Kingdom for less than 183 days in a tax year. However, it is still possible for a person to be known as a resident in UK under some pre-defined conditions. If you are a non-resident, buying a property in UK could prove to be a smart investment.
Buying via a limited company vs individually – which is tax efficient?
Now, the most important question that strikes in the mind of a UK non-resident is whether he can buy a property in a person’s name or a limited company. So, the answer is YES, and this is sideof option when a person invests in UK property through a limited companyincorporated or business office in UK, only 19% corporation tax is applicableon net income (Rental and Capital gain).
Note: Non-resident individualshareholder of Ltd company in UK may have to pay personal tax at prevailing rate in the Country of resident if he/she withdraws dividend money (net rental income after corporation tax) from limited company.
Now, you must have questions,
- what will be the impact on Tax if you buy property via Non-Resident Ltd Company incorporated or having business premises outside UK?
- Again, what is other case scenario if you buy property just as individual non-resident?
To sum-up answers, to both questions,you are called as Non-Resident Landlord. In that case,
either Letting agent or Tenant should deduct tax at basic slab rate on rental income wherever applicable. If you want get full rental Income without tax deduction
Then you can pay via self-assessment:
- Non-resident individual will have to register form NRL1i and send to HMRC
- Non-resident Ltd company having registered or business address outside UK, will have to fill form NRL2i and send it to HMRC
No wonder; tax saving is the sole reason, and because of the same, most non-residents of UK prefer to go the route of property buying via a limited company incorporated in UK.
Opening a bank account in UK as a limited company
If a person wants to open a bank account as a non-resident of UK running a limited company, the account must be a business bank account. This will help to adhere to the legal complexities of running a limited company. Also, opening the same in a high-street bank is not easier for non-residents, but fortunately, some options are available. Many people buy UK properties to have a steady rental income.
Getting the rental income and currency management
Often Non-UK resident landlords struggle to find out what could be their best option to receive the rental income. Now, most of the rent paid by tenants to them will be in pound sterling. So, they should take the best course of action for currency management. Instead of transferring the same into a foreign bank account where they live, they must mitigate the risk by opening an account with a UK currency transfer company. This will eventually help to have a better exchange rate.
Hiring an accountant for landlord from UK makes the process of buying a property a cakewalk for non-residents. The person becomes a one-stop solution to your queries and legal proceedings. Services included are
- Understanding the legal scope and documentation requirements such as ID proof, income proof, etc.
- Selecting a suitable option to help in financing the acquisition. For example, whether to go for a mortgage or cash.
- Offering assistance for completion of legal process from a trusted solicitor to ensure that property is acquired with minimum hassle.
The relationship between a property owner and an accountant for landlord continues even after the property acquisition is complete. Property tax and other related agendas need to be addressed regularly, and for that, the accountant has to remain in touch with the property owner throughout. So, if you are looking for a property in the UK, you just had the answer with an overview.