Non-resident landlords and UK rental income
A non-resident landlord ordinarily remains responsible for UK tax on taxable profit from letting UK property. HMRC's Non-resident Landlords Scheme concerns owners whose usual place of abode is outside the UK (commonly more than six months), a concept that is not identical to all other residence tests.
A UK letting agent dealing with the rent may have to deduct and account for tax at the applicable scheme rate unless HMRC has authorised gross payment. Receiving rent gross is not an exemption from the landlord's underlying UK tax obligations. Joint owners have separate shares and reporting positions.
A landlord's own tax position abroad must be checked under local law and any treaty provisions, with appropriate credit or relief claimed where available.
Buying: SDLT and foreign ownership
Purchasing an English or Northern Irish dwelling may attract SDLT at ordinary rates plus a 5% additional-home supplement where applicable, and a separate 2% non-UK-resident supplement where the SDLT residence rules are met. Corporate purchasers may encounter special rules.
Those regimes have specific exceptions and their residence tests differ from the Income Tax Statutory Residence Test. Financing and whether the owner already owns homes overseas can alter the result.
Selling: CGT, PPR and prompt reporting
Non-resident individuals disposing of UK land and property are generally required to report the transaction within the applicable UK property reporting time limit even if no UK CGT is due. Special valuation and rebasing provisions may affect the gain for long-held assets.
A former main residence that was later let may qualify for PPR for some periods; it is not automatically exempt indefinitely. Non-resident periods and the special occupation-day requirements should be checked.
Estate planning and overseas ownership structures
A UK home or rental property may form part of a person's UK IHT exposure even where they live abroad. Since 6 April 2025 long-term UK residence tests have affected the reach of IHT to overseas assets for some people, with continuing consequences after departure.
Owning the property through a UK or offshore company introduces Corporation Tax, shareholder taxes, possible ATED, SDLT and inheritance issues. Since April 2017, interests in overseas companies and certain related financing can remain within the scope of UK IHT where their value is attributable to UK residential property. An offshore company should not be assumed to make a UK dwelling free of UK taxes.
Practical compliance for an overseas owner
Keep UK rental, repair and mortgage statements, evidence of tax paid or withheld, residence-day records, ownership and trust documents, and records of purchase and improvement expenditure. Ensure tax advisers in the UK and country of residence know the same facts.
Hermens can discuss letting, tenant administration and property management in West London and Surrey. We do not advise on which country should tax an owner, claim double-taxation treaty relief or design personal tax structures.