No, not normally. If you are a UK resident and domiciled person (that is somebody who is born and brought up here) you will be liable to UK tax on your world-wide income and capital gains. You will also have to pay income tax and CGT in the country that the property is situated.

However, you need to remember that you will receive a tax credit against your UK tax liability for the tax that you have paid overseas.

Case Study

John buys an investment property in Spain for £300,000.

He rents it out for several weeks in the summer and receives £10,000 in rental income. His tenants or the Spanish agent should withhold 25% (without any deductions) and pay that over to the Spanish tax authorities as his Spanish tax liability.

In the UK John will be able to deduct the Spanish tax charged at 25% from his UK tax liability charged at 40% (assuming he is a higher rate taxpayer).

John will be able to deduct any expenses in Spain such as agent’s fees, repairs and mortgage interest. He may find that he has little or no further UK income tax liability because the Spanish tax has been deducted without taking into account any expenses