No need to budget for tax on property overseas

UK investors buying overseas property via a company will enjoy a ‘benefit-in-kind’ tax saving as it was abolished by the UK Treasury in March’s Budget. Individuals of second homes abroad who had bought a property through a private company, were previously taxed on rental income at 8% of the value of the house perceived to be as a benefit to the individual. In some cases 40% tax payers with property worth £300,000 would pay out £9,600 per annum, in addition to corporation tax on any rental income the property generated.

HM revenue and Customs reversal of their decision will mean individuals who have been paying the tax on property abroad will be allowed to claim it back retrospectively. The new ruling is encouraging in light of increasing numbers of first-time buyers electing to buy a home abroad in order to get onto the property ladder.

UK owners of holiday homes abroad are required to declare it on their UK tax return and must pay tax on any rental income earned but Norwegian buyers however it seems are facing even more taxing times with news that the tax authorities in Norway now want to register all property abroad owned by Norwegian citizens and intends to impose 60% punative fines on those who fail to do so. The Norway Post reports some 30,000 Norwegian holiday home owners have already registered their property abroad, but the tax authorities there believe the actual number is much higher.