Overseas property business for individuals

Produced by Tolley
Overseas property business for individuals

The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Overseas property business for individuals
  • Introduction to the taxation of an overseas business property
  • Foreign property income
  • Basis of taxation ― territorial scope
  • Remittance basis
  • Residence status overseas
  • Computation of profits / losses of an overseas property business
  • Adjustment to allowable expenses
  • Property allowance
  • Trusts
  • More...

Introduction to the taxation of an overseas business property

The way in which an overseas property business is taxed depends on the ownership structure of the business. This guidance note looks at the income tax implications of running such a business. For more on the taxation of an overseas property business which is subject to corporation tax see the Overseas property businesses for companies guidance note in the corporation tax module.

The purchase of a property abroad will always be complex as at least two different jurisdictions’ laws will need to be dealt with when considering the tax aspects. For this reason, it will always be important to take expert local advice on the local tax position, as well as considering the UK tax position.

If an individual is taxable in the UK on income from an overseas property business or any gain arising on the sale of the property, then consideration will need to be given to any foreign tax paid and how this can be relieved against the UK income or capital gains 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.

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 domiciled. For the remittance basis generally, see the Remittance basis ― overview guidance note.

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

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