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An insight into GCC property investments in the UK

As the global property market continues to evolve, investors from the GCC countries have shown significant interest in the UK property market

These investors, hailing from nations such as Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE are increasingly drawn to the residential and commercial properties in the UK, a testament to the stability and potential returns offered by the region. However, tax compliance issues can be a major challenge for these non-resident landlords. This article offers an impartial look at the tax obligations, the potential for tax savings, and the role of the UK tax advisor for non-resident landlords in the UK.

Tax compliance for GCC investors in the UK

Investors from GCC countries who are not residents in the UK must comply with the country's tax laws regarding property income. The rental income generated from their UK properties is subject to taxation under the non-resident landlord (NRL) scheme. This scheme allows for the taxation of UK rental income at the source unless the landlord has been approved to receive rent without tax deducted.

The annual tax on enveloped dwellings (ATED) is another consideration for GCC investors, which comes into effect when a residential property worth more than £500,000 is owned by a 'non-natural person', such as a company. Although commercial properties are mostly exempt, if such properties are converted into dwellings, ATED could apply.

As of April 2025, non-UK residents disposing of residential property in the UK have been required to pay non-resident Capital Gains Tax (CGT).

Mitigating tax liability

Despite the complexity of the UK tax system, several strategies can be employed to reduce tax liability. These include:

Operating through a company: One potential approach is to set up a UK-limited company to purchase and manage the properties. The corporation tax levied on such companies often has a lower rate than the income tax, potentially reducing tax exposure.

Utilising tax reliefs and exemptions: There are various tax reliefs available to property investors, which can lower taxable income. These range from deducting letting agent fees and legal fees to claiming private residence relief (PRR) if the property has been the landlord's main home at some point.

Effective investment structuring: By strategically structuring the investment, such as using leverage (borrowing to invest), it's possible to optimise tax efficiency. Loan interests are usually tax-deductible, reducing the taxable base.

With the complexities of the UK tax system and the potential repercussions of non-compliance, the services of an accountant can be valuable to GCC investors. Some of the areas where they can assist include:

Understanding the NRL scheme: A tax accountant can guide investors through the NRL Scheme and help with the application process.

Dealing with ATED and CGT: Given the complexities of ATED and CGT, a tax accountant can offer valuable guidance to ensure accurate and timely filings.

Tax-saving strategies: Tailored advice from a tax accountant can help GCC investors to maximise available tax reliefs and exemptions and plan to minimise CGT exposure.

Filing tax returns: A tax accountant can manage the process of filing tax returns, ensuring accuracy and timeliness.

Liaising with HMRC: In case of any disputes or queries from HMRC, a tax accountant can act as a liaison, providing the necessary explanations or evidence.

As GCC investors continue to tap into the UK property market, understanding and complying with the tax laws are crucial aspects of their investment strategy. By leveraging tax-saving opportunities and the expertise of a tax accountant or a registered tax agent, they can effectively manage their tax obligations. This not only ensures compliance with the law but can also contribute to a better return on their investments, making the UK an even more attractive destination for property investors.

Namrata Thakkar is a CMO at Kingdom Corp.