Expats Renting Out Property in Britain Should Prepare for Higher Tax on Rental Income.
British expats living in the UAE who earn rental income from UK properties are set to face higher taxes from April 2027. Meanwhile, those planning to return to Britain will continue to benefit from an annual £20,000 tax-free cash savings allowance once they become eligible to contribute again.
Chancellor John Healey’s Budget combines measures to ease household energy costs with a further two-percentage-point increase in tax rates on savings and property income. It also abandons plans to reduce the annual cash Individual Savings Account (ISA) allowance. www.gov.uk
For Britons living in the UAE, the effects will depend on their financial connections to the UK, including property ownership, savings and plans to retire or return home.
“What remains unchanged in the Budget may be just as significant for British expats in the UAE as the measures it introduces,” said Tony Smith, Head of Tax, Technical & Advice Delivery at St James’s Place – Asia & Middle East.
“With its focus on energy, the cost of living and greater devolution, this was a domestically focused Budget that is unlikely to fundamentally change the long-term plans of many British expats.”
Higher taxes on UK rental income
The increase in property income tax is one of the most significant changes for UAE-based Britons who let out homes in the UK.
From April 6, 2027, property income tax rates in England, Wales and Northern Ireland will rise to 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for additional-rate taxpayers. These rates reflect a further two-percentage-point increase on those previously announced for the same date. www.gov.uk
Living overseas does not exempt landlords from UK tax obligations on rental income earned from British properties. Depending on their circumstances, landlords may have tax deducted from their rental payments or obtain approval from HM Revenue & Customs to receive rent in full and settle their tax liability through Self Assessment. www.gov.uk
For British expats who own rental properties, the increase makes it important to reassess post-tax returns and determine whether rental income will continue to meet their living expenses, mortgage commitments or retirement goals.
“The further two-percentage-point increase in savings and property income tax from April 2027 warrants particular attention, especially among those earning rental income from UK properties,” Smith said.
Tax-free savings allowance remains unchanged
Healey’s decision to maintain the £20,000 annual cash ISA allowance preserves an important tax-free savings opportunity for eligible UK residents.
For British expats, eligibility largely depends on residency status. Holding a British passport does not automatically grant someone living overseas the right to make new contributions.
Those who become non-UK residents can generally retain their existing ISAs and continue to benefit from UK tax advantages on the savings and investments already held. However, they are usually unable to make further contributions while living abroad. Exceptions apply to certain Crown employees working overseas and their spouses or civil partners.
Contributions can generally resume once individuals return to the UK and re-establish UK tax residency, subject to the applicable annual allowance. www.gov.uk
“Maintaining the £20,000 annual cash ISA allowance instead of implementing the proposed reduction is also significant for those planning to return to Britain, as they can generally resume contributions once they become UK residents again,” Smith said.
Support with household energy bills
For households across Britain, the Budget also introduces measures aimed at easing energy costs and providing relief from the cost-of-living pressures.
Up to 20 million households in council tax bands A to D across England will receive a one-off £100 Household Energy Payment in 2027, with funding allocated for comparable support elsewhere in the UK.
The government will also extend the temporary cut in electricity VAT until July 1, 2027. These measures will be funded through a temporary increase in the surcharge on bank profits, which will rise from 3% to 6% for 15 months.
In addition, the government will ask energy regulator Ofgem to abolish gas standing charges and incorporate those costs into unit prices. While this would remove the fixed daily fee, it would not necessarily reduce the overall energy bill for every household.
Mounting pressure on Britain’s high streets
The Budget comes amid growing calls from retailers for support with the rising costs of operating businesses in Britain’s town centres.
According to Savills figures cited in the supplied Bloomberg report, more than one in 10 shops on UK high streets is vacant. Retailers are grappling with higher operating costs and shifting consumer habits, while business leaders are calling for more comprehensive reform of business rates, the tax levied on commercial properties.
“It has to be wholesale reform, not just tinkering around the edges of our business-rate taxation in the UK,” Richard Walker, executive chairman of Iceland Foods, told Bloomberg Radio.
For British expats in the UAE who own businesses in the UK, another previously announced measure is worth noting. Pubs and social clubs in England are set to receive a 20% reduction in business rates from April 2027. Restaurants are excluded from the relief, according to the report.
Separately, Burnham has announced a £210 million high-street regeneration package aimed at redeveloping derelict buildings and helping businesses avoid closure. These initiatives form part of a broader economic regeneration effort rather than changes to the personal tax obligations of British expats.
Planning for a return to Britain
For many British expats, managing finances across international borders will remain an important part of long-term financial planning.
Smith said St James’s Place’s Money on the Move 2026 research found that 78% of affluent and high-net-worth expats surveyed in the UAE intended to remain overseas for at least another eight years. The figure applies specifically to the surveyed group and should not be taken as representative of all British expats.
“For these families, managing finances across borders is a lasting part of life overseas,” he said.
“Their financial plans need to account for where they hold their savings, where they intend to retire and whether they might eventually return to the UK. Even when a Budget does not change those plans, it can influence how they prepare for the future.”
