Are you a non-resident residing in the EU with property in the UK?

22 April 2015

There are changes in capital gains when it comes to owning property in the UK for those not residing in the United Kingdom. You need to be aware as the changes are taking place on 6th April 2015.

Whether you have an investment property, are holding on to a property you previously lived in or are awaiting settlement into your new life before considering your options you will still be liable to pay tax should you sell your property, even as an expatriate.

What are the general rules?

Up to April 5th you will be expected to pay tax of 18% which can rise to 28% depending on where your personal income bracket falls. This means you will attract a certain level of tax depending on your circumstances. There is, however, an allowance of £11,000 per person.

There are specific rules about being a non-UK resident and these should be looked into in detail as the legalities can easily catch people out. Don’t make your investment fail you. Ensure that you have been a non-UK resident for at least 5 tax years, the years you have lived abroad must have been consecutive.

Any capital gains can be attracted also by the country that you reside in. This means that you can be liable to pay ‘double tax’ so ensure that you know how you stand when it comes to tax responsibilities.

A principal private resident relief may be provided if you have owned your home and lived in it for that entire time. Any full gain will be exempt from tax. If you consider a grace period of 18 months then you will be deemed as the occupant for that time. This was previously 36 months (before April 2014.)

Which rules will be changed?

From 6th April rules on taxation when selling property are changing. Any gains from the sale of property will be taxable regardless of how long you have lived as a non-UK resident. The gains will be taxed at the same UK rate of 18% or 28% and the annual allowance will increase to £11,100 per person.

Companies or trusts will be charged different rates of tax allowance.

If, however, you have resided in your UK property for a 90 consecutive days then you may be able to apply for relief known as principal private residency relief. Any UK property owner is liable for tax though whether the property is currently being used as a dwelling – if it is suitable for residency despite if it is not utilised as such you will be liable for tax based on UK percentages.

If you have lived or used the property for 90 days you may be able to avoid tax gains although you will expect to be classed within UK resident status which means you will be liable for tax on any worldwide assets.

Things to consider

It’s vital that you understand where you sit in terms of the double tax treaty as tax regimes in your country of residence are applicable. There are routes that can be taken to reduce the amount of tax you pay in a legal manner.

A wealth management company such as Alexander Peter are able to look at your options, your status and your commitments in order to put into place recommendations on whether to sell your property, retain it or invest in further opportunities in order to reduce your tax bill in the future and help you get the most from your current and proposed investments.

Please contact our wealth management experts regarding financial advice at [email protected] or call +44 870 495 1323 in order to talk to us and find out more.

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