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  1. #1

    Default Expat - Tax Questions!

    Hi Guys,

    I'm looking for advice regarding paying tax on income from a UK property, if the landlord is out of the country for an extended period of time - say 1 or 2 years!

    Mum is in Australia currently, and I'm making sure she's not going to come home to a huge Tax bill, so any advice regarding this is greatly appreciated.

    Thanks in advance.
    Steve
    Your attitude, not your aptitude, will determine your altitude. (Zig Ziglar)

  2. #2
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,628

    Default

    Hi Steve,

    1) Tax is always due in the country it is earned. So if its a UK property, and making a taxable profit, then UK tax will be due

    2) If the tax payer is tax resident in another country, then they will have to pay tax on their worldwide income in the tax resident country. Normally double tax agreements exist to stop tax payers having to pay tax twice (two countries) but quite often a top up is required. For example if a NZer owns a UK property. Tax due in UK at UK tax rate, say $10,000 @ 25% being $2,500. Then say NZ tax rate is 33%, then have to pay $3,300 NZ tax on UK income less $2,500 already paid. Obviously UK currency would have to be converted to NZ$.

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.

  3. #3

    Default

    Hi Ross,

    Thanks for the info - but Mum's not a resident in Australia . . . yet . . . so she'll have to pay tax in the UK only I'd guess? She only has income from her UK pension, and the income from her rental property (previously her own place of residence).
    Do you know if she'd be taxed at the normal UK rate (what is that?) or would she be taxed as a pensioner (at what rate for that?)

    Finally, as you seem to be quite knowledgeable in this area, can we look after Mums tax affairs from this side of the world, or must we have an agent in the UK?

    Thanks.
    Your attitude, not your aptitude, will determine your altitude. (Zig Ziglar)

  4. #4
    Join Date
    Jun 2006
    Location
    London, UK
    Posts
    10

    Default

    Hi Steve,

    I am no expert when it comes to Tax questions, although I know there are some special rules applying to Owners who are abroad when renting out there properties in the UK. The main one being that the Letting Agent/Tenant is responible for withholding 20% of rental profits and paying this to the HMRC. This is then offset against the tax payable when assessed on the annual Tax return. Alternatively you can apply to HMRC direct for exemption from this requirement.

    Have a look at the HMRC website for more information. As I have not posted enough times on this forum I am not permited to post links. To find the correct section, once on the main page of the HMRC website, click on "sitemap" (across top) then the "A to Z List" under General and then the letter "N", then "Non Resident Landlord"

    Otherwise probably best for your Mum to see an Accountant for advise so that there is no surprises awaiting on her return to the UK.

    Roger

  5. #5

    Default

    Hi Roger,

    Many thanks for the valuable advice, it's pretty much how I expected it to be, but I needed some confirmation to show Mum. I'm sure she thinks I'm trying to scare her - and like most (uneducated in this subject) people, she seems to think it's not a taxable issue as she's retired! (Go figure).

    I'll print out your post and checkout the site you mention, and show her the evidence. Maybe then I can get her to send of an exemption request to the Tax Office1

    Thanks again for the info, much appreciated!

    Regards,
    Steve
    Your attitude, not your aptitude, will determine your altitude. (Zig Ziglar)

  6. #6

    Default Resolved?

    Quote Originally Posted by steevg View Post
    Hi Guys,

    I'm looking for advice regarding paying tax on income from a UK property, if the landlord is out of the country for an extended period of time - say 1 or 2 years!

    Mum is in Australia currently, and I'm making sure she's not going to come home to a huge Tax bill, so any advice regarding this is greatly appreciated.

    Thanks in advance.
    Steve
    I appreciate this is quite an old thread, but did you find out in the end what taxes you were liable for and to what extent?

    Although not we are not qualified tax advisors/accountants, we have covered similar questions in the past and subsequently written about them, how did you find the best way to establish your tax liabilities?

  7. #7
    Join Date
    Mar 2012
    Location
    London
    Posts
    70

    Default

    I am not expert regarding this topic. but in my point of view different countries have different rules. you pay tax from where you earned. from where your property belong, you pay to that country.

  8. #8

    Default

    Rabia,

    Appreciate the response, and we did get an "official" answer by getting in touch with an accountant in the UK.

    The taxes on the property were due in Mum's home country (UK), as one would expect, and as she is a pensioner, the income on the property, should have been an additional income. The fact that she was out of the country gave her some limited tax advantages, but it turned out to be of little use.

    Unfortunately, due to some very bad property management, the rent was in arrears quite badly by the end of the tenancy, and thanks to that, the offset against the tax at the end of the tax year was negligible. So to be honest, we still haven't got a definitive answer, or one which may apply if the same situation arises in future.

    Regarding your comment:
    Quote Originally Posted by Rabia View Post
    I am not expert regarding this topic. but in my point of view different countries have different rules. you pay tax from where you earned. from where your property belong, you pay to that country.
    The above situation with Mum (who lives in the UK, and was on vacation for a substantial period of time outside of the UK) is a different matter to your comments - and Ross' answer earlier in this post was fairly accurate:

    If I (as a NZ citizen) hold property (or any other business) oversea's, I still have to submit these "earnings" to the Tax department in NZ. Like most things, I'd presume there are ways around this, but generally the NZ IRD want to know of any and all other interests I have overseas.

    There would be a relationship in terms of income & tax paid in the country I hold property in, and what I would have paid in tax on the same venture in NZ - if the taxation level in NZ is higher than in the country I hold property in overseas, I could be liable to pay tax to the NZ IRD also.

    My advice:
    Always check with your own tax specialist, and never assume or believe what you may be told by others, as everyone's situations are different.

    Regards
    Your attitude, not your aptitude, will determine your altitude. (Zig Ziglar)

  9. #9

    Default

    You can apply to HMRC for approval to receive the rental income gross i.e. without any income tax having been deducted if your UK tax affairs are up to date.


 

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