Investing in the UK: Top 5 tips for non-UK residents

Investing in the UK can be an attractive option for non-UK residents looking to diversify their portfolios and take advantage of the country’s strong economy and stable financial markets. However, investing in a foreign country comes with its own set of challenges and considerations. Whether you’re an expatriate, an international investor, or simply looking to explore opportunities in the UK, here are the top five tips to help you make informed investment decisions.

If you are thinking about Investing in the UK, our main message is simple: get counsel early.

1. Hold UK investments through a non-UK company:

If you are not domiciled in the UK (or are not presumed to be domiciled in the UK), you will be subject to UK inheritance tax (IHT) on UK assets. Holding UK assets indirectly through a non-UK firm will frequently (but not always) remove their worth outside IHT’s reach. This is due to the fact that you hold a non-UK asset (the shares in the non-UK corporation) rather than a taxable UK asset. This technique, however, does not work for residential property in the United Kingdom. If you possess UK residential property through a non-UK business (whether it is utilised by family members/friends or rented out to third parties), the shares in the company will be liable to IHT to the extent that their value is derived from the UK residential property.

Also Read :- UK trade and investment: Advantages and Disadvantages

2. Non-residents are only liable to UK tax on certain income and gains:

Non-resident people are not taxed in the United Kingdom on bank interest or dividends paid on UK shares. Non-residents, on the other hand, are liable to UK tax on rental income from UK real estate at rates of up to 45%. Holding UK rental properties (whether residential or commercial) through a non-UK corporation can decrease the UK tax rate on rental revenue to 19%.

Non-residents are normally exempt from UK capital gains tax (CGT) on gains realized on the disposal of assets, including UK assets. However, profits earned on disposals of interests in UK property (residential or commercial) and UK property-rich organizations are liable to CGT. Again, keeping UK property through a non-UK corporation can lower the rate of UK tax on the property.

3. Tax reporting deadlines can be very short:

Non-UK residents who are subject to UK income tax or capital gains tax must file a UK tax return. This is true even if the UK tax is exempt under a relevant double tax treaty. Non-residents’ tax returns must normally be submitted by 31 January after the end of the UK tax year to which they pertain, with any tax owed due at the same time. Non-resident people who sell UK real estate must, however, file a specific non-resident CGT form and pay any tax payable within 30 days of the sale.

Note that UK tax years (unusually) run from April 6 to April 5 of the following year.

4. Make a UK Will and a Lasting Power of Attorney:

You should think about writing a UK Will to protect your UK assets since it will likely make dealing with the assets easier in the case of your death. You might also consider executing a Lasting Power of Attorney (LPA), which is a specific power of attorney that allows your designated attorney to deal with your UK assets if you lose the ability. Even if you have a comparable contract in your home jurisdiction, creating an English law LPA is recommended since a foreign power may not be acknowledged by the persons and organizations with whom your attorney must interact. The English LPA might be limited to solely decisions concerning your UK assets.

5. Confidentiality:

You should think about investing in the UK to establish a UK Will, to protect your UK assets since it will likely make dealing with the assets easier in the case of your death. You might also consider executing a Lasting Power of Attorney (LPA), which is a specific power of attorney that allows your designated attorney to deal with your UK assets if you lose the ability. Even if you have a comparable contract in your home jurisdiction, creating an English law LPA is recommended since a foreign power may not be acknowledged by the persons and organizations with whom your attorney must interact. The English LPA might be limited to solely decisions concerning your UK assets.

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