Overseas Resident Individual
 |
| Overview |
| Forms to get you started |
| Fees |
| Frequently Asked Questions |
| HMRC Guidance |
| Rates & tables |
| Residency notes |
| Maintaining your records |
 |
 |
| UK Resident Individual |
| UK Resident Company |
| Overseas Resident Company |
| Company Info |
|
Frequently Asked Questions
The basics
- Is my letting income taxable in the UK?
- How can I minimise the tax I have to pay?
- What kind of expenses can I deduct?
- Am I eligible for any UK tax free allowances?
- Suppose the UK tax authorities don't know about my rental income?
- How do I register with the UK H.M. Revenue & Customs?
- Will I have to make UK Tax Returns?
- How will I know I'm paying the right amount of tax?
- Will my rental income be taxed where I live as well as in the UK?
- What are the benefits of making UK Tax Returns for the landlord?
Capital Gains Tax
Income Tax
- I want to rent my property to a relative who cannot afford the full market rent. What are the taxation implications of this?
- I travel to the UK each year to check up on the property and use the opportunity to visit the family. Is the cost of travel allowable?
- Before buying my investment property I had two abortive purchases. The legal and survey fees amounted to about £1,500. Can I claim tax relief on these?
The basics
Is my letting income taxable in the UK?
Yes.
How can I minimise the tax I have to pay?
Deduct the expenses of letting from the gross rents and claim UK tax free allowances.
What kind of expenses can I deduct?
All the expenses directly related to maintaining and running the property, arranging the lets and collecting the rent. If you borrow to buy the property the interest you pay can be deducted too.
Am I eligible for any UK tax free allowances?
It depends on where you are a citizen. Landlords Tax Services Ltd will advise you.
Suppose the UK tax authorities don't know about my rental income?
The UK H.M. Revenue & Customs have arranged matters to ensure they will know about it. If you don't register with the UK H.M. Revenue & Customs, your lettings agent will have to deduct tax at the basic rate (currently 22%) from your gross rent without any allowance for expenses before they send you what's left.
How do I register with the UK H.M. Revenue & Customs?
Landlords Tax Services Ltd will do this for you.
Will I have to make UK Tax Returns?
Yes. Once a year.
How will I know I'm paying the right amount of tax?
Landlords Tax Services Ltd will tell you.
Will my rental income be taxed where I live as well as in the UK?
That depends on where you live. Consult Landlords Tax Services Ltd.
What are the benefits of making UK Tax Returns for the landlord?
You get your rent less the agent's charges and expenses, without deduction of tax. You pay your tax based on the income less all the expenses at a later date. Professional attention can lower tax bills.
Capital Gains Tax
I thought non-residents do not pay Capital Gains Tax (CGT). Now I have heard they do. What is the position please?
This is generally far more complicated than is realised. There have been many thousands of pages written on this subject, and the following paragraphs can only give a very generalised and necessarily incomplete view of the rules.
Where you are resident and where you are ordinarily resident are of importance in this context. Residency is defined by the number of days (excluding the days of arrival and departure) spent in the UK in any one year, and the past four years. Ordinary residence is where the taxpayer is habitually resident.
For example a Turkish citizen whose parents and grandparents were born and live in Turkey emigrated to the US many years ago where he settled and has lived until he came to the UK for a two-year contract. He is probably domiciled in Turkey (though he may have adopted the US as his domicile of choice) he is ordinarily resident in the US and is resident in the UK for the time being. All of these definitions apply for the purposes of UK tax legislation only.
Non-residents who are not ordinarily resident in the UK are not generally liable to Capital Gains Tax.
A person is non-resident if his visits to the UK do not exceed 183 days in any one tax year nor average more that 91 days over the last four tax years.
A person who has been resident in the UK for any part of four or more out of the last seven years and who then becomes non-resident for a period of less than five years will be liable to Capital Gains Tax on the disposal of the assets they owned before they left the UK. So one would need to plan a long way ahead.
A disposal after emigration from the UK but before the following 5th April may be subject to CGT.
Life changing decisions should not be driven by tax considerations!
Whether you are UK resident or non-resident, if your property sale brings you into the Capital Gains Tax net then the rules for calculating the tax are the same. See UK Resident CGT
Income Tax
I want to rent my property to a relative who cannot afford the full market rent. What are the taxation implications of this?
If you rent a property to a connected person it is likely that the H.M. Revenue & Customs will ask whether the rent being charged is at a commercial rate. If the rent is below the market rate then the allowable expenses may be restricted so that any loss is ignored, and is not available for offset in the year or in any future year.
I travel to the UK each year to check up on the property and use the opportunity to visit the family. Is the cost of travel allowable?
It is not only non-residents who incur travel expenses in looking after their investment property. The rules are more or less the same for both non-residents and for residents of the UK. An expense is allowable for tax purposes if it was incurred wholly and exclusively for the purposes of maintaining the property income. Clearly whether a landlord lives in Manchester or Miami, if he travels to Liverpool only to attend to his let property there, the cost of the travel is normally allowable. If he stops off to do the Christmas shopping or to visit a friend then the expense is not allowable because it was not incurred exclusively for the purposes of maintaining the rental income. If the gentleman from Miami travels to Liverpool where he visits his family then takes a taxi for a journey where he only deals with the let property the taxi fare will be allowable.
Before buying my investment property I had two abortive purchases. The legal and survey fees amounted to about £1,500. Can I claim tax relief on these?
No I am afraid not.
The taxation of individuals is a complicated subject that can never be exhaustively reviewed in a forum such as this, which may be considered a rough guide only. Accordingly you should not rely upon the foregoing in connection with your tax planning or the taxation position. You should always seek professional advice specific to your own circumstances.