Overseas property businesses

By Tolley
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The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Overseas property businesses
  • Overview
  • Foreign property income
  • Overseas considerations
  • Private use of the overseas property
  • Reporting

Overview

The purchase of a property abroad will always be complex as the taxpayer (and his advisers) need to deal with the law in at least two different jurisdictions when considering the tax aspects. Therefore it is important to take expert local advice on the local tax position as well as considering the UK tax position.

If the individual is taxable in the UK on income from an overseas property business or any gain arising on the sale of the property, he will need to consider any foreign tax already paid and how this can be relieved against the UK tax liability.

Foreign property income
Basis of taxation ― territorial scope

Taxpayers who are resident and domiciled in the UK are taxable on their worldwide income on the arising basis. These terms are discussed in detail in the Residence ― overview and Domicile guidance notes.

ITTOIA 2005, s 269

Those who are UK resident but not domiciled in the UK may instead use the remittance basis of assessment. This means that the property income is only taxed when it is remitted (brought) to the UK. If these individuals choose not to use the remittance basis, they are taxed in the same way as those who are UK ordinarily resident and domiciled. For the remittance basis generally, see the Remittance basis ― overview guidance note.

ITTOIA 2005, s 832

The rules as to what constitutes a remittance are complicated, and it is possible to remit money by accident, for instance by using the bank account to settle a UK debt such as a credit card bill, see the When are income and gains remitted? guidance note.

Until 6 April 2013, those who were not ordinary resident could also access the remittance basis for income from overseas property business. Ordinary residence

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