Buy to Let

Brits letting out properties urged to learn tax changes

British expats often rent out their house when they are working abroad or buy a home to rent out as an additional source of income, but they are being urged to make sure their tax affairs are in order.

More and more councils in England in particular are introducing licencing schemes for landlords and they apply to those who live overseas. It has also emerged that details of landlords are being passed to HM Revenue & Customs (HMRC), the tax gathering authority.


It means that any expat renting out a property in the UK that they own should be making sure they are paying tax on any profits. There are also a number of changes relating to tax which expats might not be aware of.

Any expat who has failed to declare rental profits and gains from the sale of investment property dating back 20 years is likely to be on HMRC’s radar. Indeed thousands of landlords have been caught out avoiding tax by a council passing their registration information under a licensing scheme to HMRC.

The schemes are generally regarded as being put in place to root out rogue landlords, but experts are warning that expats could be caught out. In particular, if they are resident abroad they may not be up to speed with the changes in the UK.

From a list of 27,000 landlords, HMRC found 13,000 had failed to register to pay tax on their rental profits or property sales. The data from Newham Council in East London, has so far led to landlords paying £113 million in tax and penalties.

Several other councils run similar schemes covering thousands more landlords, including Liverpool, Croydon and Waltham Forest and Barking and Dagenham in London, and these mandatory licensing schemes are becoming more and more popular.

Newham has led the way, introducing its first licensing scheme in January 2013 and it is planning to renew the scheme from January 2018. However, an application from east London council Redbridge to license all buy to lets and shared homes has been rejected.

Skipton International, an offshore branch of a British building society, has launched a guide for expats, explaining the latest tax changes. It has found that expat buy to let is booming, with inquiries from British expats up 124% from the United Arab Emirates, 118% from Switzerland and 162% from Hong Kong.

‘There have been a number of measures over the past few years that have affected overseas investors who own UK buy to let properties. The phasing out of mortgage rate relief is likely to have an impact on some landlords so this is a good time for property owners to look into this in more detail and take professional advice where appropriate,’ said Nigel Pascoe, director of lending at Skipton International.

‘Buy to let remains a popular long term investment for British expats and we don’t expect the phasing out of mortgage interest rate relief to change this. The guide is a way of helping ensure expat investors are aware of changes in the UK, so they can prepare for them,’ he added.

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