This is the view of many people. Unfortunately it is also the view of UK’s HM Revenue & Customs
(HMRC). So why should we be concerned?
If you leave the UK to work or retire in Malaysia and purchase or rent a property here but keep a UK property, then tax problems could arise. In many cases, a property in the UK is kept to return to or rent out potentially leaving an income tax or capital gains tax (CGT) liability and an inheritance tax liability. The immediate response of our bar fly acquaintance will be “Don’t worry mate,you’re UK non-resident.” Unfortunately, bar fly advice can be financially detrimental to your wealth.
If you rent out your UK property, your tenant or letting agent (if you have one) should deduct UK income tax at 20%. You may be able to claim some of this tax back later, but this depends on certain circumstances. Non-UK residence is not a reason for not paying tax on UK rental income. If your tax affairs were up to date when you left UK you might be able to have the rent paid without this hassle but a complex form NRL 1 must be completed. Still, your bar fly will say “HMRC will never find out, so don’t worry.” Unfortunately HMRC will find out because they obtain details of letting income under their exhaustive powers.
What if you don’t rent out your UK property but stay there occasionally for short periods? You then have two places you hang your hat; Malaysia and the UK. Well, HMRC say if you have more than one property you must elect which is your main residence for UK CGT purposes otherwise you could be taxed at up to 28% on any gain on disposal. Remember this election must have been within 2 years of the purchase of the second or subsequent property. If you fail to do this, then HMRC will elect for you. This may well be your property in Malaysia so when you come to sell the UK property CGT could be payable!
The bar fly will say “Don’t worry mate, you’re UK nonresident.” Hang on haven’t we been here before?
(HMRC). So why should we be concerned?
If you leave the UK to work or retire in Malaysia and purchase or rent a property here but keep a UK property, then tax problems could arise. In many cases, a property in the UK is kept to return to or rent out potentially leaving an income tax or capital gains tax (CGT) liability and an inheritance tax liability. The immediate response of our bar fly acquaintance will be “Don’t worry mate,you’re UK non-resident.” Unfortunately, bar fly advice can be financially detrimental to your wealth.
If you rent out your UK property, your tenant or letting agent (if you have one) should deduct UK income tax at 20%. You may be able to claim some of this tax back later, but this depends on certain circumstances. Non-UK residence is not a reason for not paying tax on UK rental income. If your tax affairs were up to date when you left UK you might be able to have the rent paid without this hassle but a complex form NRL 1 must be completed. Still, your bar fly will say “HMRC will never find out, so don’t worry.” Unfortunately HMRC will find out because they obtain details of letting income under their exhaustive powers.
What if you don’t rent out your UK property but stay there occasionally for short periods? You then have two places you hang your hat; Malaysia and the UK. Well, HMRC say if you have more than one property you must elect which is your main residence for UK CGT purposes otherwise you could be taxed at up to 28% on any gain on disposal. Remember this election must have been within 2 years of the purchase of the second or subsequent property. If you fail to do this, then HMRC will elect for you. This may well be your property in Malaysia so when you come to sell the UK property CGT could be payable!
The bar fly will say “Don’t worry mate, you’re UK nonresident.” Hang on haven’t we been here before?
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