10 11

Non-UK resident

(British/EU Citizen)

Non-UK resident

(non-British/

EU Citizen)

Offshore structure

(trust and/or

company)

Exposure on UK investment

√* √ x

Tax-free equity (2020/2021 rates)

£325,000 £325,000 N/A

Taxable rate on balance (net of outstanding loans)

40%** 40%** N/A

HW Fisher & Company * If UK domiciled, inheritance tax exposure is on all worldwide assets. ** Consider offshore structure (for non-UK domiciled individuals) or insurance cover to mitigate tax exposure.

Inheritance Tax Inheritance tax (IHT) is paid on an estate when somebody passes away. The threshold for an estate to be subject to IHT is a value of £325,000. For a married couple, the threshold is £650,000.

Tax will be levied on any estate valued above this point at a rate of 40%, or 36% if the estate qualifies for a reduced rate as a result of a charitable donation. The reduced rate is applicable if 10% of the net value of the estate is given to charity. The net value is minus the nil-rate band and any other reliefs and exemptions applicable.

There have been a number of changes to IHT relating to non-domiciled British citizens, with the government now taking into consideration properties owned in foreign countries as well as any UK estate. IP Global recommends speaking to a lawyer regarding how the changes could affect your estate.

Once you have chosen a lettings and management agent, they will collect the keys and handover documents, and inspect the property to ensure that everything is in working order. This is known as snagging and is generally only completed on new-build properties.

As an overseas investor, it is recommended that you fill in a non-resident landlord form for tax purposes. Your lettings and management agency will also be able to advise you on legal requirements and compliance matters before letting your property.

It is common to furnish properties in Scotland before letting, and this is something your agent will be able to help you arrange, with many offering furniture packages.

The agent is then responsible for marketing the unit to prospective tenants, conducting viewings and handling negotiations. Once an offer is approved, the agent will conduct the necessary background checks on the tenant(s), including credit referencing, previous landlord and employment checks.

If all of this information is acceptable to the landlord, the tenancy agreement is sent to the landlord and tenant to sign. Once the contract is signed the agent will organise check- in and arrange an inventory of the unit. At this point the investor is obliged to make an account with a deposit protection scheme to protect the tenant s deposit and minimise disputes at the end of the tenancy period. The agent will be able to handle this on your behalf.

The agent will help collect the rent every month and pass it onto the investor. If the investor does not have a UK bank account, then they will be liable to pay international bank transfer charges. Some agents collect their fees on a monthly basis and deduct it directly from the rent.

The agent can also pay other bills such as factoring charge on your behalf. When a tenancy agreement is terminated or not renewed, the agent will begin to remarket the unit for either re-letting or sale. When the tenant leaves, the agent will organise a property inspection and arrange for any repairs to be carried out. The agent will also advise whether there need to be any deductions from the tenant s deposit for loss or damage.

Most agencies are also able to arrange contents, public liability and rental guarantee insurance on the landlord s behalf.

LETTINGS AND MANAGEMENT

PROPERTY CHECK

ORGANISE CHECK-IN

CONTRACT RENEWAL OR REMARKETING FOR NEW TENANT OR SALE

RENT COLLECTION

MARKETING OF UNIT

TAX