I'm still quite new on this forum so I'm sorry if I am posting this in the wrong place.
Has anyone here bought a property in the UK and kept it after they move to Switzerland? If so, does anyone know if its best to do this before leaving the UK so I have the UK tax year and bilateral treaties in my favour or is it better for me to do this as a cash buyer from abroad once I'm in the CH tax year?
My situation is that I have been offered a job in CH and I have quite a bit of savings here in the UK and I think I would like to invest a chunk of that in a flat in London so I can come back on weekends and not have all my money as cash in a bank account. I don't think I would rent it out as I would prefer it to be a holiday flat for me.
I suspect I will take out a small mortgage to pay for the flat and that I would pay it off in 5-10years.
So if you buy soon after you've left the UK, you'll be ok. But don't leave it too long.
What you need to be aware of is that having an apartment in the UK that's not rented out, could mean HMRC will consider you tax resident in the UK. While dual taxation treaties mitigate the effects, you'll end up paying more tax.
This site tells you if you're automatically tax resident in the UK (which seems unlikely).
This site talks about "The ties test" that will also be used to determine residency. You will almost certainly have an accomodation tie. If this is the only tie, then so long as you're in the UK 120 days or less per tax year, you should be ok.
I'd buy the apartment before I left the UK simply because it'll be easier than dealing with it from Switzerland.
Also bear in mind that for council tax purposes a second home/empty home pays more in council tax - half as much again for an empty home with my council.
I'd also add the aggravation factor of having a property (rented or not) while you're in another country. It's not always easy and you need a good support network back in the UK. You end up paying a premium on costs because you're not local.
Additionally, it means a significant block of money is tied up in a UK property which is fairly illiquid. You lose choices about what to do with that money.
That might not be a good idea and it very difficult to get an actually ruling on it until you actually actually do it....
There is the possibility that you could be considered partially resident in the UK if you have your own place to stay when there. If you check the Revenue site you will find various documents showing how the Revenue intend to deal with this kind of situation. This is called Revenue practice, but it is not the law, it's their interpretation of it and some times they get it wrong!
For most people the rule is simple if you are resident in a country for 183 days you are considered tax resident otherwise not and this simple rule covers most people. But there are situations where the Revenue can apply a different set of rules such as a combination of things like:
- Have a vacant home in the UK that is used when visiting
- Uses UK bank account for daily living
- Has business interests in the UK
- Has close family members resident in the UK - spouse, kids, dependent relatives etc
- Regular remittance of cash to UK accounts etc...
But even in this circumstances, unless there is significant amounts in outstanding taxes, the Revenue will probably not bother with you.
So if you have significant assets in the UK, it is probably best to seek professional advice before you do anything.
"Also bear in mind that for council tax purposes a second home/empty home pays more in council tax - half as much again for an empty home with my council."
Depends on where it is - I pay the same as everyone else in Band D for my house in Scotland and my bill has my Swiss address on it as the council is fully aware we are here. It has enough furniture etc as we need on a visit and we have clothes there so we can travel light.
When we had the flat we rented out for years until we sold up earlier in the year, we were registered with HMRC as overseas landlords so no UK tax on the income was payable. The letting agent used to email me the tax declaration certificates when issued every year.
@NotAllThere thank you for your advice, yes I have seen those links, they are useful as I definitely do not want to be classes as a resident for UK tax purposes! Assuming I do not get classes as a 'resident' as I am not there for long enough, I wonder if its more tax efficient to do this before I go to CH or after I go abroad ? I understand Stamp Duty for non-UK residents has a 2% surcharge now. Also mortgages as a non-resident may become more expensive. But I will have more purchasing power in a year.
I agree though sorting out a mortgage from here would be easier, I have also done a lot of research on where I would like to buy.
I guess I wonder if there are any tax advantages in UK or CH when buying a property when I move abroad that I should consider?
Yes, I was thinking it might be tricky to get a mortgage once I'm abroad, though, I also read a few articles that for the first 1-2 years after moving abroad its easier.
Ah yes, I guess I would probably rent it for a short term period to prevent that happening. I think the rules state as long as its rented at some point in the year you can avoid additional council tax rates.
Yes I am mindful that it would tie up money but I am not sure what I would do with the cash. I did consider buying in switzerland but its substantially more expensive and I'm not sure where I'm going to live yet other than it being around Zug for work.
Re Vacant home I could mitigate this if I rent it for a couple of months once a year. Although I would be tempted not to with the hassle.
Re UK bank account I did not think that would also be used to decide if I was still a resident. Not sure I am ready to close my account yet but once I'm settled in CH I guess I could make it dormant? hmmm I may ask the question on the finances threads.
Re Business in the UK That is also an issue, I have a small business on the side that I toy with, I think probably closing it down or making it dormant is easiest.
Re Regular Remittance I had not considered this either but worth thinking about now before I travel out there thinking I can send money back. I may feel that my safest bank is the one I am familiar with in the U.K. but I guess I will need to make sure I keep my savings there.
My employer is going giving me tax support in the UK and CH so I can probably ask them but I am trying to do as much thinking on this now as possible. Thank you.
@Cherub thanks for sharing. Could you help me understand if you were an overseas Landlord did you need to complete UK tax returns even though you didn't need to pay any tax in the U.K.? Or was it necessary and sufficient to incl any rental income on your CH tax returns?
Also, did you find it complicated in Switzerland and need a specialist accountant or was it relatively straightforward to complete your Swiss tax returns with the annual statement from the letting agent?
If you generate rental income in the UK you have to complete a tax return in the UK. This may well show that your income is below your personal allowance so you won’t have to pay tax on it. But you do have to complete the return. The residence question is more relevant for determining if your income outside the UK should be taxed in the UK as well as outside it.
For your Swiss tax return you don’t have to declare the non Swiss income. You should however list your global assets and liabilities which determine your tax rate. People don’t always do that though. Not doing it means you can’t claim the UK mortgage interest though.
If you find yourself dealing with the Revenue at this level, these gimmicks won't work - the property must be occupied every time you are present in the UK, it is not even required that you visit the property on any occasion during the year.
As I said already, if you have significant wealth in the UK, it is probably best to seek professional advice. On the other hand if it is a modest house and a small account for paying related expenses, the Revenue are unlikely to have any interest in you even if you technically meet the requirements.
My experience was that it was much more difficult to get a mortgage once abroad. We rented out our UK home when we moved over here, which we had bought on an ordinary mortgage as we were UK resident at the time. The lender allowed us to convert it to a BTL mortage once we moved over here and rented it out, although at a higher interest rate. However, once the fixed term was up they would not give us another mortage and nor would almost anyone else as non-residents, despite significant equity. We were limited to a very restricted selection (2, I think) of specialist lenders who were a fair bit more expensive. For some reason the associated conveyancing was also more complicated. Our previous solicitor said they couldn‘t act for us as we were non-resident and we had to look for someone specialist to do it (though in the end I think they were cheaper!).
If you have savings, as said in OP- then no mortgage required. As said, once you are abroad, it is much harder to get a mortgage.
We bought our flat a couple of months after we moved, but chose not to have a mortgage, but used savings. It has been a very good investment, and we enjoy going there regularly, so not renting it out.
"@Cherub thanks for sharing. Could you help me understand if you were an overseas Landlord did you need to complete UK tax returns even though you didn't need to pay any tax in the U.K.? Or was it necessary and sufficient to incl any rental income on your CH tax returns?
Also, did you find it complicated in Switzerland and need a specialist accountant or was it relatively straightforward to complete your Swiss tax returns with the annual statement from the letting agent?"
We have to submit online UK tax returns every year, and up until early 2019 we still had an LLP in Scotland that we kept running as we didn't know how long we were going to be in Switzerland. When OH's job became permanent in 2018 we decided to close our small company down as we were only still dealing with a handful of clients. When we still had the LLP our accountant did our tax for us.
For our Swiss tax returns, we use a firm of tax accountants based in Solothurn who deal with ex-pats. We email them scans of all the paperwork they need. For the flat we owned we had to give them the bank transactions and copies of any invoices for repairs and insurance (the flat had its own account). We also have to supply the annual mortgage statement for our Scottish house and details of other personal financial bits and pieces we have in the UK.
OH doesn't have the time or inclination to handle tax for himself, so prefers to pay to have it done. I have time to sort all the paperwork out as I don't work.
I don't think what I buy will be classed as significant wealth. I will get tax support via my employer soon, just trying to understand what others on this forum would do.
Okay, I think that's good to know you do have to declare non-swiss income too.
okay, really helpful to know. Given you have to get the paper work ready for the accountants, it sounds like you have a fairly good understanding of what is needed and the impact. Thank you. I will have tax support soon with my employer which will help with both UK and CH taxes but just trying to consider some options now.
Would you happen to know if my mortgage interest on the UK property could be offset against my CH income taxes particularly the cantonal and comm taxes? I know mortgage interest on CH property can be used to offset some sorts of taxes but just wasn't sure re to non-swiss property.