refer to the government\u2019s website<\/a> for further clarification on how much you might owe.<\/p>\nIncome tax<\/h2>\n
If you rent out a property, you will probably need to pay income tax on your profits, depending how much you make and your personal circumstances. Profit is based on what you\u2019ve got left from your rental income after taking away expenses or allowances you can claim. Changes to Section 24 of the Finance Act mean that since 2020, buy-to-let landlords have been able to claim a tax credit based on 20% of their mortgage interest payments.<\/p>\n
For landlords and property investors, you need to register your profits on a self-assessment tax return to HMRC, with different ways to register depending on whether you are self-employed or a sole trader, not self-employed, or a member of a partnership. Non-UK residents must also pay income tax on any UK earnings from rental income.<\/p>\n
Corporation tax<\/h2>\n
Investing in and trading property as a limited company rather than an individual has become an increasingly popular way of reducing your tax bill due to the Section 24 changes being rolled in. If you own a property or properties through limited company, your profits will be subject to corporation tax rather than income tax, which can be much lower. They pay 19% on profits up to \u00a350,000, 25% on profits over \u00a3250,000, while those with profits between these two amounts pay tax at the main rate, reduced by a marginal relief.<\/p>\n
However, there are a number of factor to take into account before deciding to invest using a limited company, one being that mortgages for limited companies tend to be more expensive and harder to obtain, while you will also have to pay for the additional accountancy costs of running a company. To decide whether this is the best route for your property investments, speak to an accountant or financial advisor.<\/p>\n
Property tax for non-UK residents<\/h2>\n
Non-UK residents, expats and foreign nationals have to pay tax on the profits from any rental income they make from property owned in the UK. After deductibles (including things like property management, repairs and maintenance, wear and tear and insurance), the rate of income tax charged on these profits is between 20% and 45%, depending on the total amount. If profits are below a certain level, no income tax may be due, so check the UK government website for the latest details.<\/p>\n
Whether you pay tax in your country of residence as well depends on the country\u2019s tax agreement with the UK, so it is best to contact your local tax authority.<\/p>\n
In the UK, all properties you own are treated as a single entity for tax purposes. Foreign investors can apply to be treated the same way as a UK resident landlords, meaning you include your calculation of rental income on an annual tax return and send to HMRC. Payments are made in two installments (31 January and 31 July), with the tax year running from 6 April to 5 April the following year.<\/p>\n
If you do not apply to be treated as a UK landlord, your letting agent or property manager will deduct 20% from any rent collected, after expenses, and pay it to the Inland Revenue before returning your profits to you.<\/p>\n
Capital gains tax applies to profits made from property sales in the same way as for UK residents, as does stamp duty (which includes an additional 2% stamp duty surcharge on top of the rate paid by UK residents). For more information on any of the above, speak to an expert or visit the government\u2019s website.<\/p>\n","protected":false},"excerpt":{"rendered":"
Tax and Stamp Duty Stamp duty All residential properties bought in England and Northern Ireland are subject to stamp duty land tax if they are above a certain price (currently \u00a3250,000). If you are a first-time buyer and the property costs less than \u00a3450,000, you will not currently be liable to pay any stamp… Read more »<\/a><\/p>\n","protected":false},"author":1069,"featured_media":0,"parent":8417,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"class_list":["post-4023107","page","type-page","status-publish","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/pages\/4023107","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/users\/1069"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/comments?post=4023107"}],"version-history":[{"count":13,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/pages\/4023107\/revisions"}],"predecessor-version":[{"id":6104813,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/pages\/4023107\/revisions\/6104813"}],"up":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/pages\/8417"}],"wp:attachment":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/media?parent=4023107"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}