Hong Kong Investors UK Property

Simon Misiewicz

Expat & Property Tax Specialist

8th March 2022

Why is UK property a popular choice for Hong Kongers moving to the United Kingdom

People from Hong Kong may be moving to the United Kingdom on a BNO VISA and looking to start investing in the UK buy-to-let property. Hong Kong Investors UK Property is becoming a regular topic of discussion amongst the expat tax accountants.

Should you invest in the UK buy to lets as a Hong Kong citizen?

You may be looking to the UK for investment purposes for several reasons.

– Stability issues surrounding China and Hong Kong

– Wish to spread investments risk across a multitude of countries

– May wish to live in the UK

– Have family members looking to move to the UK

– Want to buy a property that has a lower cost per square foot to generate an income

I am sure there are many additional reasons why people from Hong Kong will look to invest in the UK, but it gives us a basis for this article.

Hong Kong citizens that invest in UK property need to think about tax.

There are different elements of tax that you need to be mindful of when investing in real estate property in the United Kingdom for someone from Hong Kong.

Stamp Duty land Tax (SDLT) when buying a buy to let property as a Hong Konger

Stamp Duty Land Tax (SDLT) when you purchase a UK property. A banded rate for SDLT and additional surcharges apply given certain circumstances when you are a Hong Kong citizen and wish to buy in the UK.

You need to be aware that you would have to pay a 3% SDLT higher rate if you purchase a buy-to-let investment and then choose to buy a home. The 3% SDLT higher rate may be avoided if you buy a house and subsequently purchase buy-to-let property investments in your name. Equally, the 3% SDLT higher rate may also be avoided if you purchase buy-to-let investments in a limited company.

Consider the 2% foreign SDLT surcharge if you stay and live in Hong Kong. This 2% SDLT foreign surcharge can be removed if you plan to move to the UK.

It may be better to wait until you arrive in the UK before you purchase buy-to-let property investments.

UK Income tax and corporation tax for Hong Kong citizens

Income tax or corporation tax. You will pay income tax on any profits you make on UK property investments. Income tax rates are based on the amount of money you earn, ranging from 0% to 45%.

Please note that the 45% UK income tax rate may exceed where you have residential investments with a buy-to-let mortgage, often referred to as Section 24 mortgage interest relief cap.

Personal allowance. Similarly to the Hong Kong tax laws, you are eligible for some tax-free income called a personal allowance of £12,500. The personal tax-free allowance is not given if you invest in the UK and buy-to-lets but remain in Hong Kong. The tax-free personal allowance is not provided if you only wish to be taxed based on UK-generated income, not worldwide income.

You may pay tax based on your worldwide income or be taxed just on the money you earn in the UK. There is a lot of detail about residency status, domicile and the remittance basis charge.

Corporation tax. There is a flat rate of just 19% corporation tax based on the profits made in a limited company.

Capital Gains Tax issues for Hong Kong citizens

There are no capital gains tax issues for people who sell Hong Kong assets.

However, Capital Gains Tax (CGT) is chargeable on sold assets in the UK. This is a tax charge on any gains you make on an investment. You will be 10% (18% for residential property) as a basic rate taxpayer and 20% (28% for residential property) as a high rate taxpayer.

There are many ways in which CGT may be mitigated.

Hong Kong tax considerations when buying UK property investments

The top income tax rate for Hong Kong citizens is 17%, and the corporation tax top rate in Hong Kong is 16.5%.

People in Hong Kong benefit from an allowance of $132,000 before any income tax is payable.

Many tax-free allowances reduce Hong Kong taxable income. The types of tax allowances are dependent on whether or not you:

– Are married

– Have children

– Disability allowances for you or your dependents

– Dependents being brothers and sisters

– Dependents being grandparents

You will not pay tax on Hong Kong on any earnings made in the UK (investment income/dividends). As such, you could transfer money earned in the UK to Hong Kong without worrying about paying more tax.

You are most likely to pay more tax in the UK than in Hong Kong. This is because the basic rate tax band in the UK is 20%, and the UK corporation tax rate is 19%.

This also means that you are more likely to pay more tax if you allow your worldwide income to be taxed in the UK. That said, you would benefit from a tax credit for the tax already paid in Hong Kong.

As we have described for the UK, there are no Hong Kong Capital Gains Tax (CGT) or Inheritance (IHT) issues. As such, you need to consider investing and living in the UK from Hong Kong, a low-taxed country.

Converting Hong Kong Dollars into Great British Pounds

It is essential to exchange your Hong Kong dollars into UK sterling (or Great British Pounds) without being ripped off using high street banks or retail outlets. We recommend you use Wise (formerly known as Transfer Wise) to exchange your HK$ for GBP£. Wise offer a great exchange rate without the excessive commission charges.

Book a call to see how we can help you.


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