What are the pitfalls of non-resident UK property buyers?
My wife and I are looking for real estate investments in London. We currently live in Hong Kong but hope to move to the UK in the future. Forsters real estate attorney Robert Barham says over the past decade the UK government has stepped up some of the tax benefits previously enjoyed by overseas buyers. From that perspective, buying real estate in the UK would be less attractive than it used to be from a tax planning perspective. Of course, there are many reasons someone might want to buy real estate in London. As pointed out, there is a 2% stamp duty land tax surcharge that foreign buyers must pay for real estate purchased in the UK and Northern Ireland. It is worth noting that this only applies if both husband and wife do not reside in the UK. Also, even if the first residential property is located outside the UK, there is a 3% surcharge for anyone buying the property as a second residential property (4% surcharge in Scotland and Wales). For example, when buying a home in the UK or Northern Ireland for 1.8 million (after 30 September 2021, when the Covid-19 reduced tax rate is no longer relevant), a UK taxpayer buying a primary residence will pay a stamp duty of 129,750 You will pay. Or 183,750 for a second home. However, a non-resident buyer buying a second home will pay 219,750. Forsters Real Estate Attorney Robert Barham  Non-resident buyers should also be aware that when they (e.g. UK taxpayers who are higher taxpayers or additional taxpayers) dispose of their investment assets at a fixed rate of 28% of the increment, they will receive UK Capital Gains Tax. The value of the property during the period of ownership. In the past, attorneys advising non-resident buyers of UK real estate have spent considerable time and effort advising buyers on the appropriate title structure to adopt to minimize their exposure to UK taxes. This seldom happens because the benefits of using such a structure are almost negated by tax changes, and many restructurings actually result in higher tax rates. For example, if you buy a home in the UK through a non-UK company, you will typically be charged a stamp duty at a flat rate of 17% (a rate of 306,000 in the picture above). In most cases, there is no realistic or tax-effective alternative to purchasing real estate in the name of the actual buyer. One downside of this is that the land registrys records are open to anyone, so you can see who owns all the property, including the price paid by the current owner. However, whether buyers lose money depends almost entirely on the whims of the real estate market. The will of a family member made a big move because some important people were not included as beneficiaries and threatened lawsuits. We live in England. Im worried that my family will be divided if we dont get it sorted out quickly. Philip Youdan, partner at Cripps Pemberton Greenish, says the situation you are facing is not uncommon. In England and Wales, individuals are generally free to leave property and belongings of their own choosing. However, sometimes the terms of a will can be surprising or odd, which can lead to disputes. Actions can be taken to resolve these disputes early. The two main ways to contest a will is to contest whether the will is valid or to bring a claim for an offer or more from the estate. Cripps Pemberton Greenish Partner Philip Youdan  The starting point for a lawyer seeking advice on a feasibility claim is to investigate how the will was prepared. This includes the process of requesting a will file if an attorney has been used. That is, they recorded the instructions and notes they received. If a lawyer is not used, you must speak to a witness. Evaluating a provision claim requires details about the disappointing beneficiarys assets and needs. Getting this kind of information in the first place can often lead to early resolution without going to court. For example, in a justification claim, knowing that a will represents the wishes of the deceased can help the disappointed beneficiary understand the omission and live a better life. Alternatively, understanding the financial position of disappointing beneficiaries in insurance claims may make those facing the claim more willing to consider a compromise. While discussions may take place informally, the likelihood of reaching a fair and enforceable settlement can be improved by having the parties receive legal advice and engage in more formal discussions. Not everyone is eligible for a claim and strict legal time limits apply, so its important to get advice early. Arbitration is the most common way to reach an agreement in a will without going to court. Independent and impartial mediators facilitate discussions between the parties and assist them in reaching an agreement. Arbitration is more flexible than court proceedings, and the resolutions the parties can reach are far broader than those that can be enforced in court. For example, arbitration allows the parties to discuss individual assets of the deceaseds estate, some of which are not of high financial value, but of great emotional value to the parties. Arbitration is also less expensive than litigation and can be entered into an early stage, which is usually relatively inexpensive to incur. This option is confidential and non-binding, so if the parties cannot reach an agreement, they cannot bring the matter to court. Even if consensus is not reached, the problem can often be narrowed down, which can make subsequent agreements more likely. Mediation is not always the best option. Another option is to negotiate a compromise in writing after each party has exchanged letters stating their positions. Again, by understanding the arguments and counterarguments you make, you can have a constructive conversation. The opinions in this column are for general informational purposes only and should not be used in lieu of professional advice. Neither Financial Times Ltd nor the authors shall be liable for any direct or indirect consequences arising out of reliance on a reply, including any losses, and shall fully exclude liability. Feel free to email your issue to [email protected]  next question  I have received a letter from HM Revenue & Customs regarding foreign assets, income or profits. Ive heard from a friend that this is a so-called nudge letter and should not be ignored. The letter comes with a proof of tax payment to be filled out, but you should be careful with this filling out. 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