Do You Own Property in the UK or Abroad?
Are you a landlord with property in the UK?
Do you also rent out property overseas?
Then you’re running two separate property businesses.
That’s right. HMRC sees UK and overseas property as different. They see them as a separate UK and overseas property business
That means different rules. Different tax treatment. Different calculations.
Even if it’s just one buy-to-let in Birmingham and one flat in Barcelona – separate businesses.
Mixing them up could cost you money.
Let’s break this down in plain English.
No jargon. No waffle. Just what you need to know.
What Is a UK Property Business?
Understand What Counts
A UK property business includes any income from UK land or buildings.
This covers:
Buy-to-lets
Commercial properties
Furnished holiday lets (FHLs)
Flats, houses, shops – if it’s in the UK, it counts
Using an Agent? You’re Still in Business
Use an agent to manage the property?
You’re still running the business. The agent acts on your behalf.
It’s like hiring a letting agent – you don’t stop being the owner.
All UK Properties Count as One Business
Owned in Your Name? Combine the Figures
Own more than one property in the UK?
They form one UK property business – as long as they’re in your name.
You combine the income and expenses from all of them.
Then you work out your profit – or loss – for the full business.
That’s good news. It simplifies things.
If one property loses money, it offsets the profit from another.
Different Legal Capacities = Different Property Businesses
Own UK property in joint names or through a company?
That’s a different legal capacity. That means a different property business.
Example: Meet John
Two Types of Ownership, Two Property Businesses
John owns two buy-to-lets in Manchester.
He also owns a seaside furnished holiday let.
That’s all under his name. So it’s one UK property business.
But John also owns a commercial unit with a partner.
That’s a partnership. Different legal capacity.
So John runs two UK property businesses:
Personal lets and holiday property
The partnership commercial property
Furnished Holiday Lets: What’s Changing?
Rules Before 6 April 2025
Until 5 April 2025, furnished holiday lets (FHLs) had their own set of tax rules.
Separate profits. Separate losses. You couldn’t mix them with your regular lets.
From 6 April 2025: Everything Joins Together
From 6 April 2025, furnished holiday lets join the club.
You’ll combine their income and expenses with your other UK lets.
So one UK property business = one set of tax calculations.
Much easier. Fewer forms. But some landlords will lose previous FHL tax perks.
Overseas Property Business: Keep It Separate
Different Country, Different Tax Rules
Let’s say you rent out a holiday apartment in Spain.
Or a long-term flat in France.
That income goes into an overseas property business.
Completely separate from your UK properties.
HMRC doesn’t let you mix the two.
You can’t use a loss from Spain to reduce tax on UK profits.
Think of it as two buckets:
UK property goes in one. Overseas property goes in the other.
No tipping between them.
Furnished Holiday Lets Abroad: What’s New?
Old Rules for Overseas FHLs
Before 6 April 2025, overseas holiday lets inside the EEA had special treatment.
They were separate from other overseas properties.
New Rules for Overseas FHLs
From April 2025, all overseas lets – EEA or not – get combined.
As long as you own them in the same legal way.
So now you’ve got one overseas property business for everything you own abroad.
Example: Meet Anne
Anne Owns Properties in the UK and Overseas
Anne owns:
Four residential lets in Leeds
One commercial property in Manchester
Two holiday lets on the Cornish coast
One long-term let in Paris
One holiday let in Miami
Her UK properties form one UK property business.
Her overseas properties form one overseas property business.
She works out profits and losses for each business separately.
Look at this as a separate UK and overseas property business
Paris losses? Can’t offset Miami profits.
Miami profits? Can’t reduce UK tax bill.
Simple. But strict.
Why Does Legal Capacity Matter?
One Name = One Capacity
Own property in your personal name?
That’s one legal capacity.
Own it with your spouse?
Now you’ve got a joint legal capacity.
Own it through a company?
That’s something else again.
Each Capacity = Separate Business
HMRC treats each situation as a separate business.
So if you:
Or, own a shop through a company; or
Own a holiday let with a friend
That’s three separate property businesses.
Key Takeaways
Recap the Essentials
UK and overseas properties are taxed separately, it’s seen as a UK and overseas property business
All UK lets owned in one name = one business
All overseas lets in the same name = one overseas business
Legal capacity matters – don’t ignore it
FHL rules are changing from April 2025
Final Thought
Stay Ahead. Stay Compliant.
If you rent out property – anywhere – treat it as a business.
Because HMRC does.
Get your property tax sorted early.
Avoid nasty surprises, penalties, or missed tax reliefs.
Even if you’ve only got one rental now, that could change.
Start on the right foot.
Book a Call Today
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