United Kingdom Mortgages | Offshore Mortgage Desk

The UK has long been considered a tax haven for non-resident individuals, companies and trusts investing into the UK property market. The favourable tax treatment for non-resident landlords has long been believed to be one of the major reasons for the long term continuing rise in property values in the UK. Rental income has traditionally exceeded both inflation and the normal rates of interest for cash investments United Kingdom situated property has usually proved to be a valuable source of capital gains.

For UK citizens (those who are domiciled, ordinarily resident and resident) the only exemption to the charge to capital gains is where that individual sells his principal private residence. The exemption is lost for second or holiday homes and there are also significant problems which arise where even in the case of an individual’s principal private residence he also uses that property in connection with his business. This position is not, fortunately, reflected in the case of those who are not UK domiciled or ordinarily resident

Alternative Buying Process

In its simplest form a non-UK taxpayer can significantly reduce the liability to UK taxation by establishing a company based structure following the following process

A company is created in a country of low or zero taxation (eg Isle of Man) which is used to purchase private property in the UK.
That company is financed by loans made from third parties be they trusts or non-UK resident individuals. It is an important consideration that interest, charged at market value, is paid on such loans.
The company acquires the UK property and the third party lender takes a legal charge over the property which is registered at the UK Land Registry.
The company approaches the Inland Revenue as a non-resident landlord and confirms, in so doing, that it will file accounts and annual returns with the non-resident landlord unit at the Inland Revenue. If such an application is successful the tenant of the UK property is entitled to pay any rent he is charged gross and directly to the non-resident landlord. In other cases a tenant paying rent to a foreign landlord in respect of the tenant’s occupation in the UK of foreign owned property must be subject to a charge to withholding tax.
The annual accounts of the company show the rental income against which interest is an allowable deduction together with all other usual business expenses which might be incurred by the company (managing agent’s charges, accountants and legal fees).
Properly structured the company will make little or no profit which will be chargeable to UK corporation tax.
A further and significant advantage of those present UK rules affecting UK based property owned by non-UK tax payers or companies is that the UK does not seek to charge capital gains tax on the income received from the sale of UK based property where the seller is not otherwise a UK tax resident.
Stamp duty is, however, a consideration in any UK property transaction where the name of the registered proprietor (owner) is changed at the UK Land Registry. UK properties sold for a consideration in excess of GBP 250,000 but less than GBP 500,000 are charged at the rate of 3%. Sales for a value in excess of GBP 500,000 are charged a stamp duty at the rate of 4%.

To clarify, an investor may consider establishing in, for example, the Isle of Man, a discretionary trust for the benefit of himself and his family in order to acquire a portfolio costing GBP 1.6 million. A sum, say GBP 1million, would be settled in the trust. The trustees then establish a limited liability company in an appropriate low tax jurisdiction and, through that company, subject to obtaining finance to cover the GBP 600,000 shortfall, acquire the portfolio. The directors of the purchasing company also register their company with the Inland Revenue as a non-resident company, thereby enabling all rental income received from tenants of the property to be paid gross to the non-UK resident landlord companies.

The company submits annual accounts and tax returns to the UK Inland Revenue, which show a deduction from the profits received equivalent to the interest paid to the bank together with other expenses. After a period of, for example, five years the portfolio is sold for GBP 1.9 million and no capital gains tax is payable on the uplift in price. Issues of stamp duty (the UK tax payable on the transfer of property) may also be reduced or avoided in certain cases.

Investment Potential

A growth of 920% over 20 years in UK land provides you the best opportunity to invest in UK Property. Investment in UK property offers high returns and offers low risk. Thus it makes provides a great opportunity for investment in property for long-term capital gains.

As per the government UK is suffering from a severe housing scarcity primarily caused by migration, life expectancy and the rise of single person households. This is the reason that makes property investment in the UK the great opportunity for investment.

UK offers you farmland, agricultural plots and wooded areas for investing and land development.

Statistics below gives you the reasons as to why investing in property UK is the best opportunity for you to invest on.

250,000 to 3,500,000 new homes are needed over the next 15 years rising to 4,400,000 new homes are needed over the next 20 years.
The UK is the second most densely populated country in Europe and has a fast rising migrant population.
Over the last 30 years the demand for new homes has increased by 30%.
Brownfield land is found in urban areas and as most development takes place here this has and will result in overcrowding of the cities.
Greenbelt land is area around urban land and provides the best investment opportunity as these are developing areas.
Open countryside is best left as land ready for development provides the best investment opportunity.

Even small investors can find the opportunity to invest in land and property UK as plots of lands are divided and sold to different investors. All of you can take the advantage of the growth potential of a single development. Investing in UK Property and land hence is the ideal low risk and high returns investment opportunity.

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