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61% of expats aren’t aware of tax requirements for selling UK property

Rising mortgage rates and declining property value have prompted a quarter of expats to consider selling their UK property – but less than half are seeking the expert advice they need.

Written on 22 May 2023

Rising mortgage rates and declining property value have prompted a quarter of expats to consider selling their UK property – but less than half are seeking the expert advice they need.

  • Our latest research finds 67% of expats have been impacted by the global cost of living crisis
  • Almost a quarter of expats are considering selling their UK property as a result of rising mortgage rates and declining property prices
  • Only 39% of expats are aware of the Capital Gains Tax requirements when selling UK property
  • Despite this, less than half expats would seek help from a UK tax specialist before selling a UK property

Rising living costs have impacted the majority of expats

In our recent survey of 200 expats with UK connections, 67% said the cost of living and inflation has significantly affected their financial situation.

Our latest report, How Rising Living Costs are Impacting Financial Choices for Expats in 2023 , reveals that rising mortgage rates combined with the risk of decreasing property prices are prompting 24% of expats who own UK property to consider selling.

Download the full report button >

UK house prices are set to fall throughout 2023

38% of expats we surveyed have a family home in the UK and 15% have rental properties with mortgages. Therefore, it’s no surprise that 39% said decreasing house prices have significantly affected their financial situation.

After a 2.3% fall in UK house prices in November 2022, experts predict that 2023 will see a significant decline in home values of anywhere between 5% and 30% .

1.8 million fixed-rate mortgage deals are set to end this year

Of the expats we surveyed, 25% have been impacted by rising mortgage interest rates - and with 1.8 million fixed-rate mortgage deals set to end in 2023, a significant number of UK property owners will find themselves worse off.

While the average cost of a five-year fixed-term mortgage in the UK has fallen from 6.5% in October 2022 to 4.35% in February 2023, mortgage rates remain high. It’s expected that the average monthly mortgage repayment will increase by £250 a month over the year.

At the end of 2022, the Bank of England’s Financial Policy Committee estimated that UK landlords’ monthly mortgage repayments would rise by around £175 – but some experts say monthly repayments could rise by more than £300 for some landlords.

24% of expats are considering selling their UK property

As the UK property market continues to struggle, almost a quarter of the expats we surveyed are considering selling their UK properties, which no longer feel like the best investment option for them.

The most popular reasons expats gave for considering selling their property in the UK were to free up capital for other investments (34%), an expected decrease in UK property prices (27%) and to free up capital to clear other mortgages/debts (15%).

Additionally, 14% of respondents told us that their rental income is no longer sufficient or that they cannot afford an increase in mortgage interest rates (8%).

Essential Expat Tip

Level of personal uncertainty, such as job insecurity or needing funds now to support future plans, appears to be one of the main criteria influencing expats' decision to sell assets.

While nobody can predict the future, seeking advice from a qualified financial advisor can help you align your long-term financial objectives with short and medium-term decision-making.

While the immediate threats of declining property prices, increasing interest rates and inflation are diminishing the value of rental income, it’s expected that these will be short to medium-term scenarios as the world continues to recover.

A financial advisor will be able to help you make sensible, future-focused decisions, rather than knee-jerk reactions to a continuing negative outlook.

Less than half of expats would seek financial advice on a UK property sale

55% of the expats who answered our survey said they would not or don’t know if they would seek expert financial advice before selling UK property.

Furthermore, 62% told us that they would not or don’t know if they would seek independent financial advice to decide what to do with the funds from the sale.

39% of expats don’t understand Capital Gains Tax

What’s most concerning about the majority of expats’ reluctance to seek expert tax advice is that 39% of our survey respondents said they were unaware of Capital Gains Tax (CGT) requirements when selling UK property.

Selling a UK property and realising a significant amount of equity creates problems for expats without careful planning. If expats fail to correctly declare and pay appropriate Capital Gains Tax in the required jurisdictions, it can lead to financial penalties or worse.

Essential Expat Tip

When selling or disposing of any assets, expats need to understand how the value of the asset will be treated both in the country the property is located and their country of residence. If an asset has appreciated, this is likely to be considered a gain/profit and as such may be taxed under capital gains tax rules or as income. There may also be special rules in an expat’s country of residence governing the disposal of particular assets.

For example, expats that sell UK property must ensure that they comply with the non-resident capital gains tax rules and report the sale to the UK tax office within 60 days of completing the sale.  In addition, any UK capital gains tax payable must also be paid in that same 60-day period.  There are several methods of calculating the taxable gain and we recommend that specialist tax advice is sought to ensure you do not pay more tax than you are liable for.
The tax office does regular reconciliations with the Land Registry to ensure all disposals are reported, if these rules are not followed then late filing and late payments penalties can easily run into £000's.

The sale may also need to be reported in your country of residence and if it is, a credit should be claimed for any UK capital gains tax paid.

Failure to report and pay the correct tax in each country could attract fines and potentially criminal proceedings, which means getting it wrong could be a costly mistake.

As with any major financial decision, expats should seek specialist expert advice to ensure assets are disposed of/sold in the most tax-efficient way possible, making sure any gains or income is reported and taxed correctly in the correct jurisdiction.

Download the full report for more insight and advice for expats

Our latest report, How Rising Living Costs Are Impacting Expats’ Financial Choices in 2023 goes into more detail on the global factors influencing expat finances, life decisions and mental well-being as well as how expats can ensure they’re making the right choices to secure their future in this time of global uncertainty.

Download Expat Cost of Living Report 2023 >

Getting the right advice from a regulated, independent financial adviser gives expats comprehensive support to plan for their future by managing their money well today.

At Experts for Expats every introduction is dealt with by hand and we only work with people we trust. We don't use AI or algorithms, we believe that a personal service is vital to ensuring your needs are met at every stage of our service.

Expats can request a free introduction to a specialist to assist with their financial situation using one of our introduction services >

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