Tax guide for the United Kingdom: what you pay

What you need to know

1. Does tax come off rent paid to an owner abroad?

   Under HMRC's Non-resident Landlords Scheme, a letting agent of a landlord who lives abroad for 6 months or more must deduct basic-rate tax from the rent less deductible expenses whatever the rent, and a tenant paying such a landlord directly must do so only if the rent exceeds £100 a week, unless HMRC has approved the landlord on form NRL1 (HMRC).

   Where this comes from

   • What the Non-resident Landlords Scheme is (HMRC), read 26 October 2026

2. What are the British income tax rates this year?

   UK Income Tax for 6 April 2026 to 5 April 2027 is 0% on the first £12,570 (the Personal Allowance), 20% to £50,270, 40% to £125,140 and 45% above, and the allowance falls by £1 for every £2 of income over £100,000 (GOV.UK).

   Where this comes from

   • Income Tax rates and Personal Allowances (GOV.UK), read 26 October 2026

3. Do I get the tax-free allowance if I live abroad?

   A person living abroad can claim the UK Personal Allowance against UK rent if a British or EEA national, or if a national and resident of a treaty country listed by HMRC such as India, Sri Lanka or Thailand; residents of the United States and the UAE are not on HMRC's list (HMRC International Manual INTM334580).

   Where this comes from

   • Tax on UK income if you live abroad: Personal Allowance (GOV.UK), read 26 October 2026

4. Will tax rates on rent change from April 2027?

   The Finance Act 2026 (section 7) sets the UK property income tax rates for 2027-28 at 22% (basic), 42% (higher) and 47% (additional). At the Autumn Budget on 28 October 2026 the government announced that from 6 April 2027 they will instead be 24%, 44% and 49%, to be legislated in Finance Bill 2026-27, so on 4 November 2026 the higher rates were announced but not yet law. The rates apply in England, Wales and Northern Ireland to rent from a home abroad (an overseas property business) as well as to UK rent, including a non-resident's UK rent (HMRC tax information and impact note, 29 October 2026; Budget 2026 OOTLAR and Annex A; HMRC PIM4702).

   Where this comes from

   • HM Treasury, Budget 2026 (HTML), published 28 October 2026, read 10 November 2026
   • Budget 2026 OOTLAR, Annex A: rates and allowances (HM Treasury / HMRC (gov.uk)), read 4 November 2026
   • Budget 2026: Overview of tax legislation and rates (OOTLAR), para 1.2 (HM Treasury / HMRC (gov.uk)), read 4 November 2026
   • Income Tax: changes to tax rates for property and savings income (tax information and impact note, 29 Oct 2026) (HM Revenue & Customs (gov.uk)), read 10 November 2026
   • PIM4702 Rent from property outside the UK: Income Tax, read 8 October 2026
   • Finance Act 2026 (c. 11), section 7: property rates for 2027-28 (Royal Assent 18 Mar 2026), read 26 October 2026

5. Do I get tax relief on mortgage interest?

   Since 6 April 2020 an individual landlord in the UK cannot deduct mortgage interest from rental income; instead the tax bill is reduced by 20% of the finance costs, and the reduction cannot create a refund. From 6 April 2027 the reduction is worked out at the property basic rate: 22% under the Finance Act 2026, or 24% if the rise announced at Budget 2026 on 28 October 2026 is passed in Finance Bill 2026-27 (HMRC).

   Where this comes from

   • HM Treasury, Budget 2026 (HTML), published 28 October 2026, read 10 November 2026
   • HM Treasury and HM Revenue and Customs — Change to tax rates for property, savings and dividend income: technical note, read 9 October 2026
   • Change to tax rates for property, savings and dividend income: technical note (HMRC, 26 Nov 2025), read 26 October 2026
   • Income Tax: changes to tax rates for property and savings income (tax information and impact note, 29 Oct 2026) (HM Revenue & Customs (gov.uk)), read 10 November 2026
   • Changes to tax relief for residential landlords: how it's worked out (HMRC), read 26 October 2026

6. What tax do I pay on the gain when I sell?

   Capital Gains Tax on a UK residential gain in 2026-27 is 18% within the basic-rate band and 24% above it, after a £3,000 annual exempt amount (GOV.UK).

   Where this comes from

   • Capital Gains Tax: what you pay it on, rates and allowances (GOV.UK), read 26 October 2026

7. How soon must I report a sale to the tax office?

   A non-UK resident who sells UK residential property must report the sale to HMRC and pay any Capital Gains Tax within 60 days of completion, even if no tax is due or there is a loss (HMRC).

   Where this comes from

   • Tell HMRC and pay Capital Gains Tax on UK property or land if you're not a UK resident (HMRC), read 26 October 2026

8. How much council tax is due on a second or empty home?

   An English council may charge up to twice the normal Council Tax on a furnished home that is no one's main home and up to four times on a home empty for 10 years or more, but may waive either premium for up to 12 months while the home is marketed for sale or rent (GOV.UK).

   Where this comes from

   • Council Tax: second homes and empty properties (GOV.UK), read 26 October 2026

9. What does inheritance tax cover if I live abroad?

   When an owner based abroad dies, Inheritance Tax applies only to their UK assets, which include UK property and UK bank accounts; HMRC treats a person as based abroad if they lived in the UK for fewer than 10 of the last 20 years.

   Where this comes from

   • HM Revenue and Customs — Inheritance Tax: if you die when you are based outside the UK, read 9 October 2026