Opportunities for UK Landlords to take tax efficient ‘time out’

Opportunities for UK Landlords to take tax efficient ‘time out’

5:09 AM, 12th March 2023, About 12 months ago 6

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Did you know, there are currently 15 countries where UK landlords can get a special visa to live for a year or more, pay no tax in those countries, and potentially benefit from significantly lower taxation in the UK?

The above could be very appealing, especially if you can find a way to run your property rental business from a distance and you face large CGT bills on properties you’re looking to sell, or if you operate your rental property business through a Limited Company and take most of your income in the form of dividends. That’s because HMRC only tax UK residents on dividend income, they don’t apply dividend tax to non-residents. Furthermore, HMRC does not charge Capital Gains Tax “CGT” on capital gains made prior to April 2015 for property investments owned by non-residents, regardless of when you become non-resident, so if you have large capital gains that were accrued before 2015 you could discover that the tax savings you could pay for your a very long holiday.

What are these special visas called?

They are known as “Digital Nomad visas” or ‘Temporary Residence Permits’.

What is a Digital Nomad?

This is a modern term for a person who is able to run their business from any location with a decent internet and telephone signal.

Is it really doable?

The answer is a resounding YES from me. I’ve been living this lifestyle for over seven years now!

Some countries offer these visas for free, others charge a few hundred pounds and I have yet to come across any that charges over £1,000.

Why are so many countries offering these tax breaks?

Many countries suffered a severe drop in tourism revenue from the ongoing Covid-19 pandemic. As a response to this drop in tourism countries began actively targeting high net-worth individuals who could work from anywhere with a decent internet connection. The thought was that is better to have one tourist staying 12 months than 26 tourists staying 2 weeks, especially with all the travel regulations.

Working from home became the new normal during the pandemic and this made it easier to switch countries as well and work remotely. A new class of potentially nomadic high-net-worth people appeared and they were actively targeted with this new visa class. Almost all visas of this nature come with a minimum income requirement, but they are much lower than you might think.

Homeschooling and online schooling have become more socially acceptable since the Covid-19 pandemic, allowing more families to be targeted.

Tax revenues, mainly VAT, import duties, and application fees from high-spending individuals can help the governments’ budgets. Healthcare and social costs in the host country are unaffected because conditions of the visa include medical insurance and no ability to claim benefits of any kind.

Reversing a long-term brain drain. There are plenty of countries that have suffered from brain drain, where highly educated people leave the country to work elsewhere.

52 countries offer visas of this type but some have more advantageous tax schemes than others. There are 15 countries that charge no tax at all over and above the taxation the UK continues to apply whether you are a resident or not, e.g. tax on personal rental income, your share of UK Partnership profits and CGT on capital gains post-2015.

How easy is it to become a non-resident landlord?

It’s actually much easier than you might think.

Step 1 – the most difficult thing is to find a UK based team of people you trust enough to do the things you can’t do from abroad, and then to decide where your post will be redirected to

Step 2 – find a country or several countries that you would like to visit that offer these types of visas and apply. The process is quite straight forward.

Step 3 – apply for ‘Digital Nomad’ Visa’s in those countries

Step 4 – Decide what to do with your UK home. Options include; lock up and leave, sell or let.

Step 5 – visit your first country of choice and rent a place to live

Step 6 – file NRL1 forms with HMRC to declare yourself non-resident

Step 7 – make sure your Accountant knows you are non-resident and files your tax returns accordingly. It’s also important you keep your Accountant updated with any address changes

Where are those 15 tax-free countries?

In alphabetical order they are: –

  • Anguilla
  • Antigua and Barbuda
  • Barbados
  • Bermuda
  • Cape Verde
  • Costa Rica
  • Croatia
  • Curacao
  • Dominica
  • Dubai
  • Equador
  • Greece
  • Grenada
  • Malaysia
  • Monserrat

How long can I stay in these countries for?

All of the countries listed above will consider granting a visa for up to a year and many of these will extend. However, there’s nothing to stop you from hopping around a few countries or even all 52 of them offering these via’s if you’re so inclined.

Where can I learn more?

Property118 tax consultants are able to provide you with further details of 52 countries offering these types of visas, together with their key features, qualification terms, and costs.

Book a Landlord Tax Planning Consultation

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  • For the avoidance of doubt, we are able to assist landlords who own properties in England, Northern Ireland, Scotland and Wales. Where you reside is not a problem, even if you are resident outside the UK.
  • Landlord Tax Planning Consultancy is the core business activity of Property118 Limited (in association with Cotswold Barristers).

https://www.property118.com/category/non-resident/


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Comments

cashcow

19:03 PM, 13th March 2023, About 12 months ago

Well done Mark,
This may be a way of exiting this shambles of the tax trap this government has landed us with.
The other option of incorporation is great if you have kids and or want to increase your portfolio.
Getting paid to sip pina coladas on a beach for a year does appeal to me slightly.
Being forced to sell thus giving this money grabbing government loads of CGT because they make being a private landlord impossible really grinds my teeth, so I for one am very happy to consider your visa options .
I wish we landlords could do it on mass thus force the government to reconsider section 24, EPCs, and the council licensing scams.

Eden Lan

16:49 PM, 15th March 2023, About 12 months ago

Reply to the comment left by cashcow at 13/03/2023 - 19:03
@Mark ,you could pay for your a very long holiday.
Is that 5 tax years Mark?

Mark Alexander - Founder of Property118

17:44 PM, 15th March 2023, About 12 months ago

Reply to the comment left by Eden Lan at 15/03/2023 - 16:49
lol - could be a lot longer 😉

Simon Lever - Chartered Accountant helping clients get the best returns from their properties

17:20 PM, 17th March 2023, About 12 months ago

Sometimes things are not as simple!

When moving abroad you have to consider a number of hurdles for you to be treated as non-resident for a tax year.

HMRC manuals give details of what should be looked at when aiming to be non-resident.
https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt/guidance-note-for-statutory-residence-test-srt-rdr3

It is always best to take professional advice on such matters before jumping in with 2 feet!

student landlord

7:25 AM, 18th March 2023, About 12 months ago

I can’t help thinking this is somewhat misleading though. Income tax from property rental is still due to HMRC if the income is generated in the U.K? Perhaps for those that have been fortunate to have been able to consolidate it could affect tax on their dividends but as a portfolio landlord who has tried many times to incorporate but been pushed back each time due to CGT and stamp duty implications (and a bank/ lenders that will not permit us to use LLP) I can’t see how digital nomad visa would be of any benefit. My spouse and I would be very happy to relocate but we are unfortunately resigned to having to pay unfair and increasing income tax each year

Justin Barrington

7:33 AM, 18th March 2023, About 12 months ago

How long do you have to be outside UK and non resident for the reduced CGT?

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