UK tax on overseas property.

Owning property abroad does not take it outside the UK tax system. If you are UK resident, HMRC taxes your worldwide income and gains, so rent from an apartment in Spain or a gain on a home in Florida usually belongs on your UK return as well as in the country where the property stands.

This guide covers the UK side for UK-resident individuals in the 2026 to 2027 tax year, checked against GOV.UK, HMRC manuals and legislation.gov.uk. Local taxes are covered in each destination guide. International developments are being added to PROXERA; none is listed yet.

HMRC treats rent from property outside the UK as an overseas property business. Its profits are worked out under the same rules as a UK property business, but the two are kept apart, and a loss on one cannot be set against profits on the other (HMRC PIM4702). Allowable costs include repairs, landlord insurance, letting agent and management fees, accountant's fees and service charges (working out your rental income).

For individuals, relief for residential finance costs such as mortgage interest has been restricted to a basic rate tax reduction since 6 April 2020, rather than a deduction from the rent. HMRC's technical note says this relief will be given at the property basic rate from 2027 to 2028.

The rates

Your overseas rental profit is taxed at your Income Tax rates. From 2027 to 2028, property income has its own rates, and the new definition of property income, inserted into the Income Tax Act 2007 by section 6 of the Finance Act 2026, covers the profits of an overseas property business as well as a UK one.

Bands are for 2026 to 2027 with a standard Personal Allowance, which falls by £1 for every £2 of adjusted net income above £100,000. Bands differ in Scotland, and the Finance Act 2026 provides for Scottish and Welsh property rates (section 8). The 2027 to 2028 rates are in section 7.

Holiday lets and currency

The furnished holiday lettings regime for UK and EEA holiday lets was abolished from April 2025. A former EEA holiday let business is now an overseas property business, from 6 April 2025 for Income Tax (HMRC CA20025). Rent and costs arise in local currency but are reported in pounds; HMRC's Business Income Manual notes that the London closing rate is not an official rate and other exchange rates may be used, so agree a consistent method with your accountant.

A UK resident pays Capital Gains Tax on a gain on property abroad. For land or a house, GOV.UK says you pay tax in both countries and claim relief from the UK. For individuals in 2026 to 2027, gains are taxed at 18% within the basic rate band and 24% above it, after the £3,000 annual exempt amount (Capital Gains Tax rates).

Exchange rates change the gain

The gain is worked out in sterling: the cost at the exchange rate when you bought, and the proceeds at the rate when you sold. HMRC will not accept a gain worked out in foreign currency and converted on the sale date (CG78310).

With hypothetical rates and no costs, the euro price did not move, yet there is a sterling gain. The reverse can happen too.

Relief and a home abroad

HMRC merged its capital gains helpsheet HS261 into HS263 from 6 April 2019. In HS263's own example, an overseas buy-to-let gain of £7,000 bears £2,100 of foreign tax; the UK tax on it at 24% is £1,680, so the credit is £1,680. Excess foreign tax on one gain cannot be set against UK tax on another.

Since 6 April 2015, a home in a country where you are not tax resident only qualifies for private residence relief in a tax year if you, or your spouse or civil partner, spend at least 90 days there (CG64575, CG64582).

The remittance basis was abolished from 6 April 2025, and domicile stopped being a connecting factor. HMRC's helpsheet HS264 says all UK residents are now taxed on the arising basis, so rent kept offshore is taxed as it arises.

The 4-year FIG regime replaced it for people in their first 4 tax years of UK residence after at least 10 years as non-UK residents. It covers overseas property business profits and foreign gains, but claiming costs your Income Tax and Capital Gains Tax allowances, and that year you cannot claim residential finance cost relief on the overseas property business (PIM2054).

Former remittance basis users who are UK resident in the year of designation can use the Temporary Repatriation Facility on pre-6 April 2025 foreign income and gains: 12% for 2025 to 2026 and 2026 to 2027, and 15% for 2027 to 2028 (HS264), a fixed 3-year window (RDRM71000).

Inheritance Tax

Inheritance Tax is now based on long-term UK residence. If you have been UK resident for 10 or more of the previous 20 tax years, overseas assets you own outright are in scope (long-term UK residents). The standard rate is 40% above the £325,000 threshold (Inheritance Tax). Without a convention, HMRC can credit overseas tax on the asset, capped at the Inheritance Tax on it (double taxation relief).