July 30, 2025
General
Following the non-dom tax reforms introduced on 6 April 2025, many non-domiciled homeowners leaving the UK are reconsidering what to do with their UK homes. Should they rent them out—or sell? There’s no one-size-fits-all answer, but the UK tax implications are worth close attention.
Selling the Property
Selling triggers capital gains tax (CGT) on any gain, with the top rate currently 24%, unless Principal Private Residence Relief (PPRR) applies. PPRR can reduce or eliminate CGT, but only if the property was the individual’s main residence. The relief is assessed across the entire ownership period and is reduced if the property is rented out for more than nine months after the owner moves out. The rules are also much tighter once an owner becomes non-UK resident.
In short: CGT exposure should be reviewed carefully before listing a property or letting it out.
Letting the Property
Choosing to let the property means the rental income will be taxed at the individual’s marginal rate—up to 45%—regardless of UK tax residency. Some mortgage interest and letting expenses can be deducted.
However, retaining a UK residential property means the owner stays within the scope of UK inheritance tax (IHT), which is charged at 40% on the net value (after the £325,000 nil-rate band and any other reliefs). IHT exposure can be reduced with life insurance or a commercial mortgage, but both options come at a cost.
Selling the property and moving the proceeds offshore could eliminate the IHT risk—but under the new Long-Term Resident (LTR) rules, owners should still assess any ongoing exposure.
Making the Right Call
Ultimately, the best decision depends not just on tax, but on personal and financial circumstances, future plans, and liquidity. From a tax perspective, though, the implications of both letting and selling can be complex—and deserve careful consideration before making a move.
In the meantime, why not view our SDLT for Non-UK Residents page here.
Bell Howley Perrotton LLP is a limited liability partnership registered in England and Wales under number OC353525. Registered office: 20-22 Wenlock Road, London, N1 7GU. VAT number: GB 991703492.
BHP Advisory Ltd is a company registered in England and Wales under number 15240401. Registered office: 53 Davies Street, Mayfair, London, W1K 5JH. VAT number: GB 484722859.
