Foreign buy-to-let property owners get Budget boost

Owners of foreign buy-to-let property were celebrating yesterday when Gordon Brown announced plans to remove the benefit in kind tax charge that has been payable on overseas properties purchased through companies.

Setting up a company as a vehicle to invest in property abroad is becoming an increasingly popular choice for many buy-to-let investors.

Previously, anyone buying a home abroad this way with the purpose of renting it out has been liable for income tax on assumed annual rental profits.

But in his 11th and most likely his final Budget speech, the chancellor announced a raft of tax cuts, among which was the scrapping of this particular charge for buy-to-let investors.

Leonie Kerswill, tax partner at PricewaterhouseCoopers, told the Financial Times that benefit in kind tax for overseas properties has been a "sore point" for many people buying property in popular holiday destinations.

She said they could never understand why they were being asked to pay income tax on properties they had funded themselves. The chancellor's decision to scrap the tax has therefore received a warm welcome.

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