This is a div block with a Webflow interaction that will be triggered when the heading is in the view.
UK property is one of the most common assets British expats keep — and one of the easiest areas to get wrong from a UK tax and reporting perspective.
It’s the one asset almost every expat keeps.
It’s the one connection most people never sever.
And it’s the one part of their financial life that quietly bleeds money because the rules have changed far more than people realise.
I’ve lost count of the number of expats who have said to me:
“I didn’t think anything changed just because I moved abroad.”
In practice, moving overseas can change the UK compliance and tax position in several ways — including withholding mechanics on rent, filing deadlines on disposals, SDLT on new purchases, and how UK residence status interacts with transactions in a given tax year.
And the biggest trap of all is this:
UK property sits firmly within the UK tax and reporting framework even when you live overseas. The UK generally retains taxing rights over UK property income and UK property disposals, and treaties typically operate to relieve double taxation rather than remove UK tax entirely. The practical impact is that timing, documentation and compliance often matter more than people expect.
This is the guide that explains the truth.The real rules.The traps.The human mistakes that cost people thousands.
Important note:
This article is provided for general information only and does not constitute tax, legal or financial advice. UK tax outcomes depend on individual circumstances and can change. Professional advice should always be taken before acting on any of the points discussed.
Owning UK property as an expat is both comforting and risky.
Comforting because it’s home. Familiar. Simple. Predictable. The place you grew up. A piece of the UK you don’t want to lose. Risky because UK property rules are technical and evidence-driven, and outcomes depend heavily on timing and documentation.
Most British expats hold onto UK property with almost no tax strategy.
And nearly all of them underestimate the complications when they:
This article breaks down every part of the UK property tax system, with the honesty, clarity and practicality that real expats need.
If you own a UK property and live abroad, here is the truth:
UK rental income from UK property is generally taxable in the UK because it is UK-source property income.
Even if you live in a tax-free country.
Even if your salary is abroad.
Even if your accountant said “the treaty covers it”.
Even if you don’t bring the money back to the UK.
Rental income is UK-source income.
So the UK always gets first claim.
1. The Non-Resident Landlord (NRL) Scheme
If you live abroad and receive UK rental income, you should check whether you are within the Non-Resident Landlord (NRL) scheme and whether rent will be paid with basic rate tax withheld or gross (where HMRC approval for gross payment applies).
If you don’t:
Applying for gross payment approval can prevent unnecessary withholding where the individual expects to file and pay via Self-Assessment.
Many expats are surprised by withholding at source, often because the NRL position wasn’t checked early or the gross payment approval wasn’t in place.
Common reasons people fail to register:
NRL registration is not automatic.
2. Allowable Expenses: What You Can Deduct
You can deduct:
These deductions (with the exception of mortgage interest) reduce your taxable rental profit, but only where they’re correctly classified (for example, repairs vs improvements) and supported by clear records/invoices.
UK filing position
Where UK tax is payable (or a return is required), the rental profit is typically reported via Self Assessment, with withholding under the NRL scheme treated as tax paid at source where relevant.
3. The Mortgage Interest Limitation (Section 24)
This rule hit expats hard - and many still don’t understand it.
Mortgage interest is no longer fully deductible.
Instead:
For individuals with higher borrowing, the restriction can materially increase the effective UK tax cost compared with the old “full interest deduction” approach, particularly where the taxpayer is in higher-rate/additional-rate bands.
4. Policy changes that can affect the effective tax cost
UK property income rules and rates can change over time, and landlords should check the position for the relevant tax year. One recent example is the government’s announced plan to increase the rates of Income Tax charged on property income by 2 percentage points from April 2027 (subject to legislation and commencement rules). This type of change can affect the after-tax return on UK rentals and is worth modelling where you hold UK property while overseas.
The practical point: for expats, the “surprise” is often not the headline rate itself, but the interaction of withholding under the NRL scheme, mortgage interest restrictions, and timing of residence in the relevant tax year.
Double tax treaties usually do not remove the UK’s taxing rights over income from UK property. In most cases, the UK retains the right to tax UK-source property income, and the treaty’s role is to help prevent double taxation where the overseas jurisdiction also taxes the same income.
In practical terms, that means UK reporting and compliance still needs to be handled correctly, and any relief (often through a credit mechanism) is fact-dependent and varies by treaty wording and local law.
Rental income behaves differently depending on:
A common complication: UK residence applying unexpectedly in a return year.
If you return to the UK at the wrong time and accidentally trigger residency:
Expats underestimate how residency changes everything.
If you buy UK residential property in England or Northern Ireland while non-UK resident for SDLT surcharge purposes, an additional 2% non-resident SDLT surcharge may apply. The surcharge residence test is not the same as the Statutory Residence Test for income tax/CGT.
Other SDLT layers can apply at the same time, and this is where expats often get caught out:
• Standard SDLT rates apply in the usual way.
• The higher rates for additional dwellings can apply where the purchase is treated as an “additional property”. (These higher rates are currently 5% above the standard residential rates for the relevant bands.)
• The 2% non-resident surcharge (where applicable) sits on top.
Joint purchases / spouses and civil partners
For SDLT, certain rules treat spouses/civil partners who are not separated as a single unit for some “additional property” tests, and the non-resident surcharge analysis can be fact sensitive. The safest approach is to model SDLT before exchange using the specific buyer profile rather than assume “one non-resident = surcharge” (even though that will often be the outcome on a straightforward joint purchase).
Possible refund
A refund of the 2% non-resident surcharge may be available if the purchaser later meets the relevant residence condition within the permitted timeframe (subject to the detailed rules).
Practical takeaway: SDLT surprises usually happen because the buyer models only the headline SDLT rate and misses the way the 5% additional property rates and 2% non-resident surcharge can stack.
Regardless of how wider IHT and residence rules develop over time, UK-situated property remains a key UK IHT connecting factor.
Under the new system, UK-situated property is generally within the scope of UK inheritance tax. Residence-based IHT concepts can also matter for non-UK assets depending on the rules in force and the individual’s residence history.
Residence-based IHT concepts:
From 6 April 2025, legislation introduces a long-term UK residence concept for IHT purposes (broadly based on being UK-resident in 10 out of the previous 20 tax years, subject to the detailed statutory conditions and any transitional rules). This can affect the IHT analysis for non-UK assets, depending on an individual’s residence history.
Expats who return to the UK later in life may trigger this without realising.
UK property becomes the “anchor asset” that keeps them connected to the UK tax system.
Expats often keep UK property because:
But emotionally-driven decisions can become:
I’ve seen people lose thousands - sometimes hundreds of thousands - because they kept a UK property “for sentimental reasons” without understanding the tax consequences.
Most British expats assume that leaving the UK removes UK tax from capital gains. For UK land and property, that assumption is often wrong.
Today, non-residents who dispose of UK land/property can be within the UK tax and reporting regime, with the computation depending on the asset type, dates, available reliefs, and the individual’s UK position for the relevant tax year.
UK property disposals by non-residents can fall within UK CGT rules and/or UK property disposal reporting requirements. The computation and final liability depend on the facts, reliefs, losses and the specific statutory rules that apply.
And the rules get more complicated when we factor in:
Many expats are surprised by how many moving parts sit behind what looks like a simple UK property decision.
Let’s break down the most important parts.
NRCGT = Non-Resident Capital Gains Tax
Introduced in 2015 for residential property.
Extended in 2019 to ALL UK property.
This means:
If you’re not UK resident and you sell:
UK property disposal reporting (60 days)
A UK property disposal return is often required within 60 days of completion for disposals of UK land/property, and the obligation can apply even where little or no tax is ultimately payable (for example due to reliefs or losses). Late filing can trigger penalties:
When NRCGT was introduced, the UK offered “rebasing” relief.
When the non-resident property disposal rules were introduced/expanded, the legislation provided different computational approaches in some cases (including rebasing to April 2015 for certain residential cases and April 2019 for wider UK land/property rules). The correct basis depends on the facts, the asset type, and the statutory options available, and contemporaneous valuation evidence is often important.
This can be good news - but only if you:
Most expats do not.
This can either save money - or cost far more than people expect.
If you sell while still UK resident:
· at the applicable residential property CGT rates for the year of disposal (which depend on the individual’s UK taxable income position for that year).
This can be beneficial IF:
But it can be a disaster if:
Many expats wait to sell because:
But the UK changed the rules:
Non-residents must pay CGT on UK property gains no matter where they live.
The ONLY difference is:
But here’s the trap:
Residence status in the year of disposal can materially change the UK analysis. Non-resident regimes have specific computational rules (which can include rebasing/time-apportionment concepts depending on the case). If you are UK resident for the year and split-year treatment does not apply to limit the period, more of the gain may be within UK CGT than you expected. This is why disposal timing is commonly reviewed alongside residence and split-year conditions.
This is the most dangerous moment for expats:
Selling close to - or after - returning to the UK.
If you return mid-year:
This happens constantly.
Example:
An expat sells a UK property in February.
Moves back to the UK on 1 March.
Believes the sale was “non-resident”.
But:
If UK residence applies for the tax year of disposal (and split-year treatment does not limit the period), the UK analysis can change materially — including the computation basis, available reliefs, and how the gain interacts with the individual’s wider UK income position. That’s why sale timing is commonly reviewed alongside residence and split-year conditions.
Joint ownership becomes complicated when:
Key rules:
Expats constantly misjudge the complexity here.
Some expats buy UK property through:
Pros:
· rental profits taxed within the corporation tax regime at the applicable rate(s) for the company (which can vary by year and company profile).
Cons:
Since April 2020, non-UK resident companies with UK property rental business profits are generally within the UK corporation tax regime, following earlier changes from April 2019 that brought UK property gains for such companies within the corporation tax framework, alongside associated compliance requirements.
Trust-held UK property can be complex because multiple UK regimes can apply depending on the trust type, the parties’ residence status, benefit/distribution patterns, and (for IHT) the relevant connecting factors. Post-6 April 2025, residence-based IHT concepts can add another layer depending on the circumstances.
Off-Plan Property for Expats: The Hidden Risks
Expats love:
But UK off-plan has unique risks:
Common (and avoidable) issues we see include:
1. Not checking the NRL withholding position early, leading to unexpected withholding from rent.
2. Missing UK property disposal reporting deadlines.
3. Not mapping UK residence status in a sale year (especially return years).
4. Misclassifying repairs vs improvements or under-documenting costs.
5. Joint ownership not documented clearly (beneficial shares, reporting position).
6. SDLT surcharge layers not modelled in advance (especially where one buyer may be non-resident).
7. Using company/trust structures without modelling extraction, compliance, and exit implications.
8. Assuming policy changes apply in a certain year without checking commencement rules.
A practical checklist that can help reduce avoidable risk:
1. Confirm your UK residency position yearly
Track days + ties
Review SRT
Plan travel
Remove “available” homes
2. Register correctly for the Non-Resident Landlord (NRL) scheme
File properly
Avoid withholding
3. Track all rental expenses
Maximise deductibles
Avoid disallowed costs
4. Understand your new effective tax rate
Include the +2% income uplift
Watch NI interactions
Plan for higher-rate traps
5. Plan property sales with residency in mind
Avoid selling in the wrong year
Use rebasing rules
Time disposals cleanly
6. Review ownership structure
Individual?
Joint?
Company?
Trust?
7. Prepare for the 2025/26 IHT reforms
10/20 rule
Property always taxed
Tail period
8. For returners: plan your arrival month
If you are returning to the UK, map residence and split-year position before any irreversible transaction (sale, refinance, restructure), because the tax-year outcome can change the analysis
9. Keep perfect documentation
HMRC disputes are evidence-driven
10. Review everything with a cross-border adviser yearly
UK property tax is a moving target
And you need someone who understands the whole picture
Owning UK property as an expat is emotionally comforting - but financially dangerous when you don’t know the rules.
The UK does not see you as “gone”.
The UK tax system generally retains taxing rights over UK property income and disposals. Most problems arise from missed admin steps, wrong-year transactions, or assumptions that don’t hold under the rules.
With the right planning, the right timing, and clean documentation:
UK property is not the problem.
Not understanding the rules is.
And that’s fixable - as long as you plan before it’s too late.
This article is provided for general informational purposes only. It does not constitute tax advice, legal advice, financial advice, or a recommendation to take (or refrain from taking) any action. Tax outcomes depend on individual circumstances, the precise facts, and the law and HMRC practice in force at the relevant time (including changes announced but not yet enacted). No reliance should be placed on this article as a substitute for obtaining personalised advice from a suitably qualified professional. No professional relationship is created by reading or relying on this content.
Shil Shah is Skybound Wealth’s Group Head of Tax Planning and a Private Wealth Adviser, based in London. He works with clients who live global lives, executives, entrepreneurs, families and professionals who want clear, confident guidance on their wealth, their tax position and the decisions that shape their future.
UK property is one of the most valuable assets British expats hold — and one of the easiest to get wrong from a tax and compliance perspective.
In a private introductory session with our tax team, you’ll:
If you own UK property while living overseas, clarity is essential — not optional.
Book a complimentary introductory discussion
Double Tax Treaties are powerful tools - when used properly.
But they cause the most damage when expats rely on assumptions, employer guidance, or partial explanations.
If you earn income in more than one country, travel regularly, work remotely, or plan to leave or return to the UK, your DTA position must be planned early and correctly.
Book a private tax planning conversation with Shil:
.jpg)
Ordered list
Unordered list
Ordered list
Unordered list
UK property remains firmly within the UK tax system, even when you live overseas.
Rental income, disposals, residency timing, and reporting obligations often interact in ways that expats underestimate.
A focused UK property tax review can help you:
