Will I have to pay tax on the rental income?

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Will I Have To Pay Tax On The Rental Income?

Property taxation is a specialised area, you should speak to your accountant regarding your personal circumstance. The information on this FAQ is for guidance only and does not constitute advice.

You will be taxed on your Buy To Let investment property in the UK regardless of your citizenship status. You will be taxed on the profit you have on your investments, this can range from 10%-40%. However some non residents mainly citizens from the commonwealth nations or from the EU are entitled to claim personal allowances. If the UK has a taxation treaty with the country of your residence then you may be exempt from taxation on your income from the UK in your home nation. Payment of tax to the Inland Revenue is in two installments between the 6th of April of one year and the 5th of April of the other year, this is done on the 31st of January and the 31st of July each year. This is for all UK and Non-UK residents. However if this does not apply to you then another method of taxation will be imposed on your rental income, this will be managed by your property manager, where they will have to deduct a basic Revenue Tax from your rental income.UK residents will have to pay tax on the capital gain from their Buy To Let property, however if a non resident makes a chargable gain on the UK property, there may be no UK tax on the gain. This only applies if the property was purchased for generating rental income and for future worth, but if the property was purchased for the sole intention of selling it for a profit later on, it will be treated as an income rather than a capital gains, in this case UK tax will be applied on the property. In the case of VAT, most investors will have to pay VAT of 17.5% on most professional services that are related to the buy to let property, this includes, letting agents, surveyors, solicitors, etc. Since the letting of residential properties is not taxable for VAT, any VAT incurred on related activities cannot be recovered. Another form of tax you will have to pay is stamp duty this will range depending on the worth of your property. If your Buy To Let property is worth upto £250,000 then you will pay a stamp duty of 1%, and for properties worth less than £125,000 you will have no stamp duty at all. If the property is over £250,000 and below £500,000 then you will have to pay stamp duty of 3%, however if the property is over £500,000 then you will have to pay 4% of the worth of the property in stamp duty.

Non-Resident Mortgages Frequently Asked Questions

Who will manage my property in the UK?

How can I find tenants for my property?

Will I need to put down a large Deposit?

Will I have to pay tax on the rental income in the UK?

What are The Buy To Let Landlords Responsibilities?

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