Tax Rates On Rentals By Non-Nationals

[SarahBell]

They were in Portugual I think yesterday on some poroperty program (A Place in the Sun - Home or Away) and the presenter mentioned the 25% tax paid on rental income by non-nationals...

I've read previously that if you're a UK landlord overseas your tenants should save the tax for you and give it to the taxman..

So does that happen in reality? How much revenue would they be able to raise?

[ken_ichikawa]

Wut where did you hear that? It's taxable on the person who receives it not the tenants.

If you are overseas then your residency is checked, ordinary or not ordinary. if it is ordinarily resident then you have to pay UK tax on your worldwide income no matter where it arises. People get around this simply by not telling the UK government. The UK government has been known to ask and or cross check records. HK and UK for instance, when it was a crown colony it was checked. When the PRC came in they laugh at when HMRC asks.

If you are not ordinarily resident they you still have to pay UK income tax on earnings from the UK of any kind. Though again a dodge around this is to use an escrow company and a third party.

[The Masked Tulip]

There was a thread a few days ago about France introducing such a tax for holiday home / second home owners but, so far, talking to all the people I know who own such homes in France none of them have heard of it.

It all seemed very vague and HPC wishful thinking IIRC.

[ken_ichikawa]

It doesn't matter anyway as you get double tax relief.

[Goat]

I've read previously that if you're a UK landlord overseas your tenants should save the tax for you and give it to the taxman..

There is a non-resident landlord scheme and I have seen agents operating this. Not sure if this applies at the tennant level though.

Edit: it does apply to tennants as well see: http://www.hmrc.gov.uk/cnr/nr_landlords.htm#6

It doesn't matter anyway as you get double tax relief.

Explain why you think that is relevant.

Edited May 18, 2011 by Goat

[tim123]

Wut where did you hear that? It's taxable on the person who receives it not the tenants.

Direct Tenants of overseas LLs are expected to withhold the tax and hand it over the HMRC in case the LL doesn't pay.

I doubt that many do.

tim

Edited May 18, 2011 by tim123

[wherebee]

and dont forget that you can be a british citizen, but live and work in another country and pay tax under it's laws, and if there is a suitable agreement in place with the UK, you are non-tax resident here

[Goat]

Direct Tenants of overseas LLs are expected to withhold the tax and hand it over the HMRC in case the LL doesn't pay.

I doubt that many do.

Provided the LL's afairs are up to date HMRC will issue a certificate allowing gross payment.

I'd guess that 99%+ of non-resident landlords use agents so the proportion actually evading tax is probably small.

and dont forget that you can be a british citizen, but live and work in another country and pay tax under it's laws, and if there is a suitable agreement in place with the UK, you are non-tax resident here

However you will remain taxable on your UK income sources.

[easy2012]

Wut where did you hear that? It's taxable on the person who receives it not the tenants.

Yap.. "Goat" et all are correct. Thought Ken is an accountant ?

@Goat - no evasion here in most cases as usually there is no tax due as the landlords (e.g. couple) will have the usual personal allowances (2 x £7475 = £14950)

to set off against the NET rent (i.e. gross rents - expenses). (So now you know BTL is such as wonderful state sponsored business to be in...)

Edited May 18, 2011 by easybetman

[The Ayatollah Buggeri]

I've read previously that if you're a UK landlord overseas your tenants should save the tax for you and give it to the taxman..

Unless these LLs offer tenants a hefty discount on the rent (relative to the going rate in a given area for a given type of property), they must have trouble renting their properties out. I would never rent a home from someone that required me to do extra admin work of that sort unless they paid me for my time in doing it.

[davidg]

Provided the LL's afairs are up to date HMRC will issue a certificate allowing gross payment.

That is what I have. I then do a tax return in the UK where I benefit from the UK tax allowance and I do another return in my country of residence where the income is added onto my other income, my local tax authority doesn't make any allowances for UK tax already paid so I have to declare the gross amount so I effectively get taxed twice on the same income.

[Goat]

That is what I have. I then do a tax return in the UK where I benefit from the UK tax allowance and I do another return in my country of residence where the income is added onto my other income, my local tax authority doesn't make any allowances for UK tax already paid so I have to declare the gross amount so I effectively get taxed twice on the same income.

That's unusual - I thought almost all countries had double tax agreements of some sort.

[easy2012]

That is what I have. I then do a tax return in the UK where I benefit from the UK tax allowance and I do another return in my country of residence where the income is added onto my other income, my local tax authority doesn't make any allowances for UK tax already paid so I have to declare the gross amount so I effectively get taxed twice on the same income.

Err... unless your net rent > personal allowance then you have paid zero tax in the UK and hence have not been taxed twice (unless you

are saying that your net rent > personal allowance).

Normally those countries that don't have Double taxation treaties with the UK are those states with ultra low tax rates anyway (e.g. Dubai)...