People buy property in the UK for a number of reasons: investment, a base whilst the children go to school or university or they merely wish to spend some time in the UK.

If you are a non-UK resident and are considering buying property in the UK, you should be aware of the new tax rules which may affect the way on which you buy property in the UK or at all.

You should consider the following areas and seek expert legal and tax advice:

  • How you buy your property will affect how much tax you pay. It is best to discuss with your advisors your reason for the purchase and your aim. If you are buying a house to live in then Inheritance Tax (IHT) will be a significant factor. Buying a property through a corporate vehicle is not necessarily the best route anymore due to the increase in Stamp Duty Land Tax and the Annual Residential Property Tax and Capital Gains Tax on corporate entities selling UK residential properties.
  • The Statutory Residence Test can have unforeseen consequences if you and/or your family members are planning on spending long periods of time in the UK annually. Your spouses or partners could end up being considered UK residents for tax purposes which means they would have to pay tax whereas they might not have if they had remained outside the UK.
  • If you employ staff in the UK like a driver, nanny, housekeeper, live-in gardener, secretary and providing they are not considered contractors, you would have to have contracts of employment and run a payroll for them. It is essential to keep up to date with recent developments in employment law and HMRC definitions of employed versus self-employed.
My Personal Lawyer can arrange for specialist tax and financial advice for the purchase of UK real estate with a view to minimising your tax liability and making sure you do not fall into any of the pitfalls covered in this article.