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    Buy-2-Let properties in the UK – what has changed for Expats?

    It always used to be quite common for Expats to buy a property or 2, then rent them out for a few years, and then sell them at some point. Paying a bit of tax on the rental income, and then nothing when the property is sold.

    No more.

    There have been 3 changes that relate to Expats:

    1. Capital Gains Tax (CGT)
    CGT is now due on EVERY property sold in the UK.
    Since 6 April 2015, whenever you sell a property, Expats included specifically – you will have CGT to pay – you WILL get relief for the period before this date when you also owned the property.


    2. Mortgage Interest restricted as a deduction for tax purposes
    From 6 April 2017 you will NOT be able to claim 100% of the mortgage interest paid as a deduction any more for tax purposes.
    What does that mean exactly?

    It means that in each tax year you can get a deduction against profits for your mortgage interest paid as follows:

    Mortgage Interest Paid

    2016/17 100% relief against profits (the current and the last year in which this can happen!)
    2017/18 75% relief against profits
    2018/19 50% relief against profits
    2019/20 25% relief against profits
    2020/21 20% relief against profits (actually Basic Rate relief – currently 20%)


    3. Stamp Duty rates have gone up!
    New Stamp Duty (SDLT – Stamp Duty Land Tax) rates came out in December 2014.

    This has received lots of press in the UK and affects ALL purchases of property in the UK – for 1st time buyers, for people buying a place to live in, or for BTL investors.

    The stamp duty (SDLT) hikes for BTL investors refer to an extra 3% at every level of property ownership. So in terms of where we are:

    There are 5 bands of SDLT.

    Band Rate Normal Rate Additional Property
    BTL Properties

    1. <£125,000 0% 3% 2. £125k – £250k 2% 5% 3. £250k – £925k 5% 8% 4. £925k – £1.5m 10% 13% 5. >£1.5m 12% 15%

    What can you do now?

    Be aware of these changes that affect all properties in the UK, such that

    1. You WILL have CGT when you sell a property, as well as
    2. You WILL have enhanced SDLT to pay when you buy a property, and
    3. You WILL have mortgage interest restricted as a tax deduction.

    For more information and advise please contact:

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