Essential things Expats need to know about Buy to Let tax relief changes
An estimated 5.5 million UK residents are living and working abroad. For many expats this brings exciting opportunities, cultural experiences and can be highly lucrative. Maintaining links, however, with the UK many expats are finding themselves caught in the net dealing with changing UK tax legislation.
A common misunderstanding is that moving abroad exempts expats from UK tax law. This is not the case. A growing number of new clients I’m taking on are expat referrals from Australia, Hong Kong, the Middle East and closer to home in Europe. Despite living so far apart all share one thing in common – unexpected fines from our very own UK based HMRC.
Buy to Let Tax Relief Changes
Living abroad can make it difficult to stay on top of changing legislation at home. Hence, the number one reason for a sharp increase in expat fines is down to a change in tax relief on UK Buy-to-Let properties.
Ex-pats can be liable for tax on income from a source in the UK. In this case – rental income. Most ex-pats are keen to maintain a foot hold on home soil by renting out their home. Also many generate income by building up an investment portfolio of UK Buy-to-Let properties.
A word of caution to expats. Since the 6 of April, loan interest tax relief on Buy-to-Let properties is being restricted in a phased process which will be completed by April 2020. With each phase a growing number of lower taxpayers move into the higher tax bracket. Relief for interest will no longer be given as a deduction increasing taxable income in the UK. Expats will be affected too, however, living abroad they may not have heard about the changes or be aware of the financial consequences.
Ex-Pat Tax Advice and Planning Services
Tax planning is complicated enough; every individual’s personal financial circumstances are unique. Living abroad adds another layer of complexity and stress. Preparing your expat tax return while living in a different time zone and trying to communicate with HMRC in real time can be extremely stressful. Thanks to cloud accountancy systems it’s possible for accountants to work with you remotely. I’m often talking to clients across time zones to provide specialist expat tax services and work with HMRC on behalf of Brits living abroad.
If you are an expat request an initial free expat tax consultation by calling +44 (0) 141 290 0262 or email bruce@muwca.co.uk
Warmest regards
Bruce Wilson, Director Murrison & Wilson
Tax Specialist