Investment Options in the UK

investment options uk


There are a whole host of investment options available in the UK for overseas nationals who are willing to look at different ways to make a return on their money. The following ‘investment options UK’ guide looks at a number of potential investment ideas, from purchasing UK property to buying stocks and shares in a wide range of UK companies.


UK investment options


The UK has long been a global financial hub with opportunities not only for residents but also for those overseas looking to invest their money wisely. Still, as with any financial market, there can be risks, where potentially an investor could lose money as well as make it. As such, it is essential to explore all possible investment options and the potential pitfalls of each before making any firm decisions on how to invest any available funds.

There are various ways to invest money in the UK, including purchasing property, opening an interest-earning savings account, investing in a pension fund, buying cryptocurrencies, as all as buying stocks and shares. For most forms of investments, there are no restrictions on non-UK residents investing money in these ways. Furthermore, those living outside of the UK are only usually subject to taxation on UK source income and capital gains.

The investment options below set out some of the key ways in which a foreign investor can consider spending their money in the UK with a view to receiving a healthy financial return.


Property investment in the UK


Purchasing UK property has long been considered one of the best ways to invest money, not least if an investor can afford to buy a property outright as a cash buyer. The yields from rental income can be high, especially based in London, while property prices tend to rise steadily in the UK, making this a potentially lucrative way to invest any money.

There are all sorts of different types of residential properties available for sale in the UK, from huge mansions based in the capital to tiny cottages located in scenic coastal towns. While commercial property is also readily available, the capital growth and rental yields from residential properties often surpass those for commercial properties. The plans that a person may have for the property will also dictate what type of property and in what location will work best to meet their investment needs, both in the short and long term.

If looking to invest in a buy-to-let property to create a retirement fund in several years from now, it is best to seek specialist property market advice on which areas of the UK are likely to see the greatest capital growth in terms of property prices and what can be expected in terms of rental income in the interim. Alternatively, if the plan is to invest in a holiday home, one which can be partly rented out to help cover any outgoings, the choice may be less about any future financial return but more about the practicality of the property and the immediate needs of the investor and their family.

Importantly, there are no restrictions on buying UK property as a foreign investor, although a suitable visa would be needed to be able to live in that property, even if owned outright. Depending on an investor’s nationality, they may also need a visa to visit the UK to use any property as a holiday home, or to undertake any repairs or renovations. It is possible to apply for a long-term visitor visa with a validity period of either 2, 5 or 10 years. This means that the investor would not need to re-apply for a new visa each time they wanted to come to the UK, although they would be limited on each occasion to the maximum length of stay endorsed on that visa, typically up to 6 months. They would also not be allowed to use that visa to live in the UK for extended periods through frequent or successive visits.

In addition to any visa requirements, an investor would need to weigh up all the other potential restrictions when it comes to UK property, including the responsibilities on landlords when it comes to renting out a house or flat. These include complying with gas and electrical safety requirements, ensuring that the energy rating for the property meets current requirements, and keeping the property in good repair at all times. Equally, at the outset of any tenancy, they would need to check that a prospective tenant had the legal right to rent any England-based property, to help prevent illegal immigration, and take steps to put the tenant’s deposit in a landlord deposit scheme, not to mention undertaking credit checks on the tenant and entering into a signed tenancy agreement.

Still, these matters can easily be taken care of by an experienced letting agent and should not be viewed as a barrier to purchasing UK property. As such, buying property in the UK remains one of the most attractive investment options for those with the cash to do so.


Savings investments


A UK savings account is an easy and low-risk way of investing money in the UK, where an overseas national can open up a savings account with most UK banks or building societies. Although some may have residency requirements, others will allow non-UK residents to set up an account, so it is worth shopping around. It is also worth shopping around for the best interest rates, as this is the way in which money is earned on a savings account, although the financial return is typically lower than for most other forms of investment.

There are various different types of UK savings account, including:

  • An easy access account: this is a basic savings account and, as the name suggests, the account-holder will be able to withdraw money at any time without penalties, although there may be daily or monthly limits. Interest rates are usually variable and linked to the national Bank of England rate.
  • Fixed-rate accounts: these offer set interest rates over fixed periods, typically between 1 to 5 years, that are typically higher than easy access rates, although the account-holder will not be able to access money during these periods.
  • Regular saver account: similar to fixed-rate accounts, a regular saver account will usually come with conditions that the account-holder makes regular monthly deposits.
  • Notice savings account: similar to easy access accounts, but where the account-holder would need to give notice if they wanted to withdraw funds, for example, 30 or 60 days. Interest rates tend to be variable, although slightly higher than for easy access accounts.
  • Individual savings account (ISA’s): these are accounts where the account-holder can save up to £20,000 per tax year without paying tax on the interest earned on their savings, although most people can earn some limited interest from their savings in the UK without paying tax. Interest rates can be either fixed or variable, and there are different types of ISA accounts including cash ISAs, stocks and shares ISAs, innovative finance ISAs and lifetime ISAs. However, for most ISA’s, an individual would need to be UK resident for tax purposes, unless the rules for diplomatic or overseas civil servants apply.
  • Savings bond: this is a form of fixed-term investment and is an alternative to opening a savings account, where any money is locked away for an agreed amount of time where, typically, the longer savings go untouched, the higher the interest rate will be.


Pension investments


The UK has what is known as a three-pillar pension system. This consists of a state pension paid when individuals reach retirement age, where an individual would usually need at least 10 qualifying years on their National Insurance (NI) record to get any state pension.

In addition to the state pension, there are occupational pensions, where both employers and employees contribute through schemes linked to the employer’s organisation. There are two types of workplace pensions in the UK: defined benefit pensions, where the worker receives a specified pension amount, and defined contribution pensions, where the income depends on how much is paid in and how any investments have performed.

The third pillar is private pensions, which are optional pensions that can either be used to top up other pensions or as an alternative for those not entitled to state or occupational pensions. Various financial providers offer different types of private pensions, most of which can be accessed before an individual reaches retirement age.

As long as the pension scheme rules allow, anyone can become or remain a member of a UK-approved scheme, regardless of nationality and UK tax treatment, so it is worth shopping around to see how different schemes may benefit a non UK-resident.


Cryptocurrency investments


A modern form of investment that has taken off in recent years, including in the UK, is cryptocurrency. This is an alternative form of digital finance that operates in a similar way to traditional currency, but it is not controlled by any central bank or regulatory authority.

However, the UK has proposed a new regulatory regime for cryptocurrency, due to come into force in Autumn of this year, where rules governing the industry will be brought more closely into line with those for traditional financial services. Under this new regime, crypto firms must ensure that people have the appropriate knowledge and experience to invest in cryptocurrency. Those promoting crypto assets must also put in place clear risk warnings and offer a 24-hour cooling-off period for customers. Still, these new measures will clamp down on mis-selling, helping investors to make informed investment decisions.

There are various exchange websites where an overseas national can invest in crypto assets in the UK, where they do not generally need a UK bank account to do so. A crypto account can be set up with valid identification, where the investor can then trade online or retain their cryptocurrency as an investment to trade or sell at a later date. However, before investing in cryptocurrency, overseas investors should ensure that any crypto firm is registered with the Financial Conduct Authority. In this way, the investor can feel confident that the investment platform is legitimate and the firm’s activities will soon be regulated.


UK stocks & shares investments


The UK has one of the largest national stock markets in the world and, even though the UK economy has recently experienced some challenges, it still remains one of the best places worldwide to make investments.

When it comes to stocks and shares, these are stakes that a shareholder owns in a company that can be bought or sold on the stock market, although the amount that can be made, or lost, through trading in shares can fluctuate. This all depends on a company’s performance and current value, which can skyrocket as well as plummet within a short period. As such, while shares can be a lucrative form of investment, where these can potentially earn money through both dividends (ie; any profit share payouts) and capital growth (ie; an increase in fund value that can then be sold on), it is important to fully understand the stock market.

A safer alternative to buying individual shares would be to opt for investment funds, involving a professional fund manager, diversification and risk-pooling. Investment funds are a form of collective investment, where money is pooled together with other investors to purchase a portfolio of assets. Funds consist of a diverse range of assets that can include shares, property, bonds and currencies. This is different from investing in a single product, for example, a UK-based property or shares in a company, and typically carries with it a far lower level of risk, where not all an investor’s money is put into one pot.

There are various fees involved with investment funds, including management fees, but for the first-time overseas investor, it can often be a far wiser option than risking it alone.


Tax implications of investing in the UK


Before making any investment decisions it is essential to seek independent financial advice from a UK specialist. They can advise on a range of considerations, from which types of UK investments may be most suited to an investor’s needs to what the tax situation is likely to be for different types of investment. In some cases, an investor may receive a much higher return on one type of investment over another, but once the tax implications have been factored into the financial equation, they may decide on a different route altogether.

Much may also depend on how much an investor is looking to invest in the UK and how quickly they would like to see a return on that investment. It is therefore important to look at the potential figures in the round so that an informed decision can be made.

When it comes to tax, there can be income tax and capital gains tax considerations to take into account, such as income tax on any share dividends or capital gains tax on the sale of those shares. Investors may also need to pay tax on the income or sales profits from any other types of investments made in the UK, although some investment income is tax-free.

Importantly, when it comes to investing in property in the UK, prospective foreign landlords should also be aware of the Non-Resident Landlord Scheme (NRLS) run by the UK Government, where an amount for tax may be deducted directly from this income. It is possible to apply for approval from HMRC to have any rental income paid without deduction, provided this is subsequently declared by way of self-assessment, but it is best to first seek expert financial advice, both in relation to this and any other considerations.



Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.

Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing & Content Agency for the Professional Services Sector.

Legal disclaimer


The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.

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