Non-resident Landlords tax for rental property in the UK

judyr


Joined: 07/07/2009
Posts: 956

Message Posted:
05/07/2010 17:54

Please can someone advise. I am shortly to move to Cyprus and have let my house in the UK so that I still have a property here. I have changed my postal address to my parents so they can deal with anything on my behalf. My question concerns Tax... the agents managing my property say they have to deduct 20% tax so I have just been to a tax accountant for advice. They have given me a form to complete that enables me to receive the rental income gross if I apply to be a non-resident landlord. I will be receiving a pension and paying UK tax but am I classed as non-resident if I retain a house here? I will be planning to come back to the UK a few times each year so not quite sure what to do.

many thanks

Judy

MickSturbs


Joined: 23/12/2009
Posts: 110

Message Posted:
05/07/2010 18:05

Hi Judy,



It is technically true what the agents say, unless you fill out this form, forget what it is called but when you fill this in, if you are up to date with taxman and have no outstanding arguements/payments then you are entitled to receive your rent in full and you will then declare it in your annual tax return (self assessment), can be done on line and very easy. If you have a UK address then you are technically not leaving the country and should be treated as a UK resident and therefore should not need the non resident route, it is so the taxman can keep tabs on you. I would go route two!

stephen48


Joined: 25/06/2009
Posts: 224

Message Posted:
05/07/2010 18:20

hi judy, we have exactly the same situation with our properties in the uk.



if you derive income from the uk you will have to pay 20% to the tax men.



the agent can do it for you on a monthly basis and therefore the amount you receive is less their fees and tax.



the alternative is to take the amount gross less the agents fees but you would have to fill in a self assessment at the end of the year and the inland revenue will work out the tax.



either way, being non resident does not mean you can have the income gross without paying tax!



one advantage of being non-resident is when there are multiple properties involved in that you would not pay capital gains should you sell the properties and remain non-resident for 7 years but as it seems to be your main residence this would not apply to you as you wouldn't pay it anyway.



hope this helps.

judyr


Joined: 07/07/2009
Posts: 956

Message Posted:
05/07/2010 18:46

Thank you but I am still confused.... I have my main residential house that I am renting out but have also bought another on a buy to let basis. Both properties have mortgages on them so will need to deduct the interest before tax becomes payable. This is not something the Agent can do, apparantly, so I will need to declare this on a self assessment. What I don't want to do is declare myself as non-resident and then not have recourse to the Uk healthcare etc when I return 2 or 3 times a year. Or am I just confusing myself with the terminology. I will be non-resident but it doesn't necessarily mean permanently... ???

wanderer


Joined: 05/02/2009
Posts: 1653

Message Posted:
05/07/2010 18:55

judyr

You are also allowed to offset interest on mortgages and depreciation/wear and tear against the rental income

Tell the agent you will sort the tax out also look round other agents to see what's on offer and their take on the situation

the butler


Joined: 22/06/2007
Posts: 1958

Message Posted:
05/07/2010 19:43

Between 1994 and 2002 my husband and I lived and worked in Italy. We let our home in the UK and we received our rent gross. The letting agent filled in all the forms, we signed and it was then sent to the tax office. I think there is a difference between non resident and non domecile and most people confuse these two. On the issue of health care in the UK, they are tightening up on the rule which only allows you to be out of the country for 3 months at a time, before you lose your eligibility to free NHS care. I myself don't agree with this, as I worked all my working life paying a full stamp but immigrants can arrive in the UK and have free access to health care but I will leave that debate for another time.

girne 29


Joined: 06/12/2007
Posts: 1488

Message Posted:
05/07/2010 20:03

judyr



Careful

.If you live in the TRNC for more than 3 months in a year you will not be entitled to healthcare anyway.

The time away from UK to qualify as non resident for tax purposes is not the same as the time out the UK that disqualifies you from NHS care.

The rules for taxation and NHS care are different, to be considered non resident for tax purposes you must stay outside the Uk for 6months per year,but you cannot spend more than 90 days in the uk at anyone time.



So qualifying for non tax status automatically disqualifies you from NHS care.

walkerscott


Joined: 13/08/2009
Posts: 901

Message Posted:
05/07/2010 22:57

http://www.which.co.uk/advice/tax-on-property-and-rental-income/living-abroad/index.jsp



http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017814



http://www.direct.gov.uk/en/BritonsLivingAbroad/index.htm



http://www.direct.gov.uk/en/HomeAndCommunity/BuyingAndSellingYourHome/LettingYourHome/index.htm



http://www.taxcafe.co.uk/property-tax-guide.html

No1Doyen


Joined: 04/07/2008
Posts: 16617

Message Posted:
05/07/2010 23:00

"What I don't want to do is declare myself as non-resident "



Ask your accountant to make sure this does not compromise your UK mortgages.

wanderer


Joined: 05/02/2009
Posts: 1653

Message Posted:
06/07/2010 07:33

No1 good point because no mortgage is for life any-more and lending criteria can exclude or force repayment with no hope of a replacement lender