Investing in UK property has long been a favourite investment non-UK residents — thanks to the tangible nature of the asset, the potential for solid capital growth and a steady rental income stream.
But when it comes to tax, there are possible implications at every stage. Here’s a look at the key tax points you’ll want to keep in mind at each stage of the property journey.
1. Buying: Stamp Duty Land Tax (SDLT)
Let’s start with the first step—buying the property. SDLT is a tax you’ll need to pay when you make a purchase, and if you’re a non-UK resident, there will be an additional 2% surcharge on top of the standard rates. If the property is a second home, additional surcharges are due. For example, buying a £500,000 UK property could leave you with an SDLT charge of around £50,000.
2. Owning: Inheritance Tax (IHT)
Once the property’s yours, Inheritance Tax becomes a factor. UK property stays within the UK IHT net regardless of your UK Long Term Resident (LTR) position (‘domicile’ pre 5 April 2025). Subject to the availability of the nil-rate band (£325,000), it could face a 40% tax charge upon death (or lifetime gifting). And since 2017, using offshore structures to shelter UK property from IHT has become ineffective.
3. Owning: Impact on UK residence position
Owning a UK property and using it as your home, is not in itself enough to make an individual UK residence, however it is a factor when considering your UK residence position and could see you being able to spend less time in the UK as a result.
4. Letting: Income Tax and the Non-Resident Landlord Scheme (NRLS)
If you’re renting out the property, you’ll be subject to UK income tax on the profits. British nationals usually keep their personal allowance, but others might not, which means tax could be due from the first pound of profit. You can deduct certain expenses (which helps), but mortgage interest relief works differently now—it’s given as a basic rate credit, which might leave you with a tax liability even if your cashflow feels tight. If you’re registered under the NRLS, tenants or agents can pay you rent without automatically withholding tax, which simplifies things slightly however a self assessment tax return will be required each year to declare your income, expenses and non-UK resident position.
5. Selling: Capital Gains Tax (CGT)
Selling the property? Since 2015, CGT applies to non UK residents selling UK residential property at a gain—and since 2019, that includes commercial property. The gain is usually calculated from the 6 April 2015 rebasing date if the property was owned by you at that time, unless you opt for time apportionment. While there’s a small annual tax-free allowance (£3,000 currently), with any gain above that being taxed at 18% or 24%. You’ll also need to report and pay the tax within 60 days of completion, and it can get especially complex if you’re trying to claim private residence relief.
Claire Spinks – Head of UK tax for international clients
UK property can be a valuable piece of a global investment strategy, but the tax landscape is complex and constantly shifting. Without the right planning, it’s easy to fall into unexpected and often costly traps. Taking the time to understand the full lifecycle of property taxation, and seeking specialist advice early on, is key to staying compliant and protecting your investment.
Julian Watson – Partner, Head of Real Estate
The Progeny Real Estate team have the experience and expertise to guide you through the conveyancing aspect of any UK property acquisition. We are familiar with the complexities for non UK residents. We would be pleased to assist. At Progeny, you can have all of your advisors under one roof.
Martin Wright – Senior Financial Planner Singapore
Whilst UK property can form a part of a well-balanced investment portfolio, for many years now it has been one of the most tax ridden investments. With tax upfront, on rental income, and capital gains tax exposure on sale proceeds it can be an expensive proposition. Brits are particularly comfortable with UK property but the fact that it will remain part of UK inheritance tax exposure for a non-LTR is another consideration. Especially when compared to holding investments offshore, or even simple UK investment funds, there is a viable reason to seek professional advice before committing to a UK property purchase.
Important Note
The information contained within this document is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
This article is distributed for educational purposes only and should not be considered financial advice.
If you are unsure about the suitability or otherwise of any product or service, we recommend that you seek professional advice.
The opinions stated in this document are those of the author and do not necessarily represent the view of Progeny and should not be relied upon to make a financial decision.
Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.
Please note
Tax treatment depends upon individual circumstances and is based on current UK tax legislation, that is subject to change at any time.
Progeny (SG) Pte. Ltd. (company no: 201506546H) is registered in Singapore. It is authorised to act as a financial adviser by the Monetary Authority of Singapore (MAS) under licence no FA100057. Registered office: 6 Battery Road #16-04/05, Singapore 049909. Telephone No: + (65) 6225 0825 Email: [email protected] Website: https://theprogenygroup.com/en-sg/
