Moving to Mauritius, 3 UK properties, limited company, tax efficiency

[Guest22]

I'm moving to Mauritius next month (June) to start a new role in a permanent position, therefore I will be leaving contracting for the time being.

However, I'm considering retaining my limited company and renting out my three UK properties through it as I've been told this would be much more tax-efficient.

My situation:

• Property 1: Surrey, owned since 2003. Residential mortgage (repayment). 3 tenants on separate flat share agreements (resident landlord).
• Property 2: London E15, owned since 2012. BTL mortgage (interest only). 3 tenants on two HMO ASTs.
• Property 3: London E3, owned since 2013. Residential mortgage (repayment). Where I currently live.

My plan is to remain on the electoral roll at property 1 and for it to be considered my UK home while I'm in Mauritius. For all intents and purposes, I will be 'resident' there (I'll use it as a base whenever I come to the UK).

Property 3 will be rented out as a whole property AST or two HMO ASTs and I'll seek permission from my lender to rent it out while still keeping it as a residential mortgage.

So, my question is, what's the best way forward in terms of tax efficiency? In my mind, the open items are:

• Should I run my landlordship as a business through my limited company?
• Which of the three properties should I put through the business, one, two or all three? (i.e., property 1 benefits from the Rent a Room Scheme at present.)
• Would it be better to make property 3 a BTL (bearing in mind I'm tied in till Jan 2018)?

I hold dual nationality (UK and Mauritius), so I'm also wondering how to be tax-efficient in terms of income tax and number of days spent in the UK and number of days spent in Mauritius, both for my rental income in UK and job income in Mauritius. I have personal and business bank accounts in the UK, and will likely open an account in Mauritius.

And finally, how do I minimise CGT should I sell the properties? I know there were some recent rules changes on UK citizens living abroad and having property in the UK (outlined here), but it's not clear how this applies to me if I'm dual nationality (not strictly an 'expat').

I appreciate there's a lot of questions here and various information available online. So I'm not necessarily looking for specific answers on all the questions here, but perhaps more some recommendations on a knowledgeable tax consultant that specialises in these areas for expats and dual nationalities would be good, too.

Thanks in advance.

[BlasterBates]

International rules mean that you will have a main residency.

The way you describe it, it could be either. This will be complicated.

By keeping your main residency in the UK means the UK authorities may see you as mainly resident in the UK and tax you on all income, obviously taking into account tax elsewhere eg Mauritius.

Equally Mauritius will see you as mainly resident there and tax you on UK income taking into account tax paid there,

This is probably not a big problem provided you don't have significant income that is taxed in full by both countries, eg interest and capital gains from investments, as this type of income is usually only taxable in one country, and if for example taxed in the UK will be taxed in full again in Mauritius, because they'll ignore any tax you paid in the UK after all in their eyes you're not resident there.

Your main residency is where the centre of your life is. If you have a partner this is usually straightforward, it's where your partner lives. If you're single it's where your friends are and where you take part in cultural activities.

If you don't want to be taxed in full by bothe countries you will need to prove to one of them that the centre of your life is in the other country. For example if you return to the UK every two weeks to see your partner and friends then probably you remain UK resident and you have to demonstrate that to the Mauritian authorities. Alternatively if Mauritius is your main residency you need to supply evidence to the UK authorities that your friends and family are in Mauritius, and you only make occasional vsits to the UK.

[Scruff]

If the properties aren't owned by your Limited Company, how do you propose running the rental business through it?

If you are the owner in your own right, then you have the rental income in your name, against which you can set off the deductible expenses?

At best, your company can set itself up as a rental agent, earning commission on the rental... This doesn't make sense however.

[Guest22]

BlasterBates - thank you for your reply. The UK and Mauritius have a DTT, so I think some of the ground rules for residency are laid out there, and it appears that I may get full relief from property income tax in the UK as long as I fully remit the income to Mauritius. It's really a question of, which way of doing it is most tax-efficient, and what choices do I have?

If the properties aren't owned by your Limited Company, how do you propose running the rental business through it?

If you are the owner in your own right, then you have the rental income in your name, against which you can set off the deductible expenses?

At best, your company can set itself up as a rental agent, earning commission on the rental... This doesn't make sense however.

Thanks for your reply. That's a good question and there's some good info here on that. I would transfer the properties to the company. This is effectively selling it to the company which would incur CGT, so it would only be worth doing on my PPR (property 3) where CGT wouldn't apply.

I'm fully aware of deducting expenses (including interest) from my taxable income. I guess the question then is, if I'm keeping the properties in my own name, are there ways of maximising my tax-efficiency given that I'll be living and working in Mauritius based on the information I've given?

[WordIsBond]

and it appears that I may get full relief from property income tax in the UK as long as I fully remit the income to Mauritius. It's really a question of, which way of doing it is most tax-efficient, and what choices do I have?

If you get full relief from UK property income tax, then it really doesn't matter how you structure it as far as UK tax is concerned. If so, this is a question about Mauritius tax law, and this might not be the best forum.

If you do NOT remit it to Mauritius, again depending on their tax law it might be exempt from tax there. Then, the UK tax efficiency question becomes paramount. But if you are remitting it and get full relief here, then do it the cheapest way possible.