The UK Budget & What It Means For Overseas-Based UK Property Investors

The budget was just announced, and to be honest, there is not a lot that changes for UK property investors based overseas in my opinion.

Below I'm going to take you through the UK budget & what it means for overseas-based UK property investors.

There are positives and negatives, but there are no show stoppers that impact the viability of UK property investing from overseas (when structured correctly).

My main take-away from this budget as a UK property investor is that lower income working families will see an increase in monthly income, with UK resident business owners, landlords owning in their personal name and big corporations taxed more to support this spending. This is very simplified, but that’s the idea.

With this take-away in mind, my approach to UK property investing after this budget remains the same:

Buy below market value properties in lower income areas of the UK with strong yields, where government investment is high, where there is a demand for good quality houses and rent to working families. 

I’m no macro-economic expert, but I’m confident that people living overseas investing in UK property will feel minimal, if any, direct impact of this budget.

So, if you were waiting for this budget before getting the ball rolling … time to pick it back up. 

Book some time with me if you'd like me put together a bespoke plan for you, taking into account today's budget announcement.

For those interested, here are the key changes that will impact UK property investors based overseas:

• Frozen income tax thresholds that were frozen until 2028, have now been frozen until 2031.

  • Impact: Naturally more people will be pushed into higher tax brackets as they earn more. 

• National minimum wage increased by 4.1% for over 21 year olds, by 8.5% for 18 to 20 year olds and by 6% for 16 & 17 year olds, plus apprentices.

  • Impact 1: Business costs will increase, product prices will follow. 

  • Impact 2: People working 40 hour weeks over 21 who were on minimum wage will now have an extra £60 (ish) in monthly pay after tax. More disposable income means more demand for relatively high cost rental properties.

• Increase in basic & higher rate tax on property rental income by 2% pts to 22% for basic rate and 42% for higher rate

  • Impact 1: UK property investors who own in their personal name with UK rental income will generally pay these higher UK property tax rates on their UK profits (subject to allowances and their band). Your country of residence may then give double-tax relief. Speak to a tax adviser for your specific situation.

  • Impact 2: UK based landlords owning in their personal name will have their profits squeezed even further, forcing them to sell. Expect a lot more tenanted properties to come on the market.

• Increase in dividend income tax by 2% pts to 10.75% for basic rate & 35.75% for higher rate

  • Impact: If you’re a tax resident abroad, you’ll normally pay the dividend tax rate of your tax residence country, and not the UK. But double check this with a tax accountant as everyone’s situation is unique.

• Council tax surcharges on properties above £2m in value (mansion tax)

  • Impact: None if you’re buying property for less than £2m.

• Business rates will increase on business properties worth over £500k

  • Impact: Minimal impact for most overseas investors focused on UK residential property. 

• Removal of the 2-child limit for Universal Credit (UC)

  • Impact: Some families on UC with 3 or more children will have more money to spend on living costs, meaning more demand for relatively high cost rental properties.

• Inheritance Tax: unused £1m business property relief allowance will be transferable between spouses/civil partners.

  • Impact: For people with qualifying business assets, not standard buy-to-let portfolios.

• There were no changes to Stamp Duty and no introduction of the rumoured property wealth tax.

If you want to read the full budget, you can do so here. Just a warning, it’s not very impartial (as you’d expect)…

Disclaimer: Nothing in this article should be taken and relied up on as financial, investment, tax or legal advice. Please consult a professional before investing.