Completing a P85 and possibly a NR1 form
Aug 13th 2014, 4:56 am
#1
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Completing a P85 and possibly a NR1 form
Hello, I recently moved to Hong Kong and realised I need to complete a P85 form for HMRC. Most of the form seems fairly straightforward but I need a little advice on section 2 (Income you get from the UK after you leave) 
FYI I am now working for a Hong Kong based company and am being paid locally.
I will be receiving income from a rental property I have and making some small interest on my UK current and savings account. Both of these are shared with my wife who is remaining a UK resident but there is nowhere on this form to indicate that this is joint income. She will hopefully also move to Hong Kong when her job permits in the future but this is not currently on the cards.
Do I declare the above income on the form but just state "my half" of the amount? I assume this will then prompt HMRC to contact me for a Self Assessment where I can state properly that the income is joint as well as demonstrate that the rental income is not profit making (it just pays off the mortgage).
Do I need to complete a NR1 form? Bearing in mind my wife is staying in the UK and we are own agents. Would it simplify things if I just completed some kind of deed of trust to sever myself from landlord duties and attribute the rental income to my wife? If so then does that mean omitting rental income from the P85?
Is there a clean, tax efficient solution that's not too complicated?
Thank you in advance!
FYI I am now working for a Hong Kong based company and am being paid locally.I will be receiving income from a rental property I have and making some small interest on my UK current and savings account. Both of these are shared with my wife who is remaining a UK resident but there is nowhere on this form to indicate that this is joint income. She will hopefully also move to Hong Kong when her job permits in the future but this is not currently on the cards.
Do I declare the above income on the form but just state "my half" of the amount? I assume this will then prompt HMRC to contact me for a Self Assessment where I can state properly that the income is joint as well as demonstrate that the rental income is not profit making (it just pays off the mortgage).
Do I need to complete a NR1 form? Bearing in mind my wife is staying in the UK and we are own agents. Would it simplify things if I just completed some kind of deed of trust to sever myself from landlord duties and attribute the rental income to my wife? If so then does that mean omitting rental income from the P85?
Is there a clean, tax efficient solution that's not too complicated?
Thank you in advance!
Aug 13th 2014, 6:07 am
#2
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Re: Completing a P85 and possibly a NR1 form
Hello, I recently moved to Hong Kong and realised I need to complete a P85 form for HMRC. Most of the form seems fairly straightforward but I need a little advice on section 2 (Income you get from the UK after you leave) FYI I am now working for a Hong Kong based company and am being paid locally.
I will be receiving income from a rental property I have and making some small interest on my UK current and savings account. Both of these are shared with my wife who is remaining a UK resident but there is nowhere on this form to indicate that this is joint income. She will hopefully also move to Hong Kong when her job permits in the future but this is not currently on the cards.
Do I declare the above income on the form but just state "my half" of the amount? I assume this will then prompt HMRC to contact me for a Self Assessment where I can state properly that the income is joint as well as demonstrate that the rental income is not profit making (it just pays off the mortgage).
Do I need to complete a NR1 form? Bearing in mind my wife is staying in the UK and we are own agents. Would it simplify things if I just completed some kind of deed of trust to sever myself from landlord duties and attribute the rental income to my wife? If so then does that mean omitting rental income from the P85?
Is there a clean, tax efficient solution that's not too complicated?
Thank you in advance!
FYI I am now working for a Hong Kong based company and am being paid locally.I will be receiving income from a rental property I have and making some small interest on my UK current and savings account. Both of these are shared with my wife who is remaining a UK resident but there is nowhere on this form to indicate that this is joint income. She will hopefully also move to Hong Kong when her job permits in the future but this is not currently on the cards.
Do I declare the above income on the form but just state "my half" of the amount? I assume this will then prompt HMRC to contact me for a Self Assessment where I can state properly that the income is joint as well as demonstrate that the rental income is not profit making (it just pays off the mortgage).
Do I need to complete a NR1 form? Bearing in mind my wife is staying in the UK and we are own agents. Would it simplify things if I just completed some kind of deed of trust to sever myself from landlord duties and attribute the rental income to my wife? If so then does that mean omitting rental income from the P85?
Is there a clean, tax efficient solution that's not too complicated?
Thank you in advance!
You only need to declare your share of the UK income for both the rental income and bank interest.
I think you are still supposed to complete a NRL1 form even though you are not using a letting agent. The NRL1 is fairly straightforward and if you are declaring the rental income no doubt the Inland Revenue will require it so I would fill one out. Presumably your wife should also declare her share of the rental income.
What I am not sure about, partly due to recent changes in legislation (the Statutory Residence Test), is whether your wife, by continuing to be a UK resident, will affect your tax status and whether or not you will be granted NR status after completing a full tax year. I would suggest that you to take a look on the middle east forum where there are several posts that discuss the recent changes. Take a look at the link in the last post of the following thread :
http://britishexpats.com/forum/middl...ays-uk-839407/
Last edited by hong_konger; Aug 13th 2014 at 6:19 am.
Aug 13th 2014, 6:14 am
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Re: Completing a P85 and possibly a NR1 form
My working assumption is:
1) I declare the income on my P85 and state "my half" of the amount
2) A deed of trust won't be possible because we jointly own the property
3) I would rather avoid completing a NRL1 due to the complication of my wife still residing in the UK. My portion of the rental income will therefore be subject to UK tax and I'll have to complete a Self Assessment later in the year.
I'm really hoping I won't have to pay tax on this UK rental income a second time when it comes to completing my first HK tax return!
Can someone validate what I've stated?
1) I declare the income on my P85 and state "my half" of the amount
2) A deed of trust won't be possible because we jointly own the property
3) I would rather avoid completing a NRL1 due to the complication of my wife still residing in the UK. My portion of the rental income will therefore be subject to UK tax and I'll have to complete a Self Assessment later in the year.
I'm really hoping I won't have to pay tax on this UK rental income a second time when it comes to completing my first HK tax return!
Can someone validate what I've stated?
Last edited by hybridE4t; Aug 13th 2014 at 6:16 am.
Aug 13th 2014, 6:20 am
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Re: Completing a P85 and possibly a NR1 form
Thanks hong_konger! I saw your reply just after posting my follow up.
I can probably post off my P85 now and will take a second look at the NRL1.
I can probably post off my P85 now and will take a second look at the NRL1.
Aug 13th 2014, 6:34 am
#5
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Re: Completing a P85 and possibly a NR1 form
Yes your share of the rental income will be subject to UK tax but you still get your UK personal allowance of around GBP 5,000. As long as your share of rental profit does not exceed your UK personal allowance you wont pay any tax. It depends on how much rental income you getting of course.
The self assessment form is straightforward. It takes 10 minutes to fill out provided you have information to hand.
I edited my original post with a link on the Statutory Residence Test
The self assessment form is straightforward. It takes 10 minutes to fill out provided you have information to hand.
I edited my original post with a link on the Statutory Residence Test
Aug 13th 2014, 7:03 am
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Re: Completing a P85 and possibly a NR1 form
Thanks. I'm working full time in Hong Kong so it appears that I'll be classed as NR from next tax year.
The NRL1 seems like hassle for our tenants, especially if they're only deducting half the tax. As we only put my wife's name as the landlord I'm hoping the tax element can just be dealt with via my SA. Otherwise we might need an agent just to sort out the tax deduction... no doubt expensive
The NRL1 seems like hassle for our tenants, especially if they're only deducting half the tax. As we only put my wife's name as the landlord I'm hoping the tax element can just be dealt with via my SA. Otherwise we might need an agent just to sort out the tax deduction... no doubt expensive
Aug 13th 2014, 7:31 am
#7
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Re: Completing a P85 and possibly a NR1 form
Thanks. I'm working full time in Hong Kong so it appears that I'll be classed as NR from next tax year.
The NRL1 seems like hassle for our tenants, especially if they're only deducting half the tax. As we only put my wife's name as the landlord I'm hoping the tax element can just be dealt with via my SA. Otherwise we might need an agent just to sort out the tax deduction... no doubt expensive
The NRL1 seems like hassle for our tenants, especially if they're only deducting half the tax. As we only put my wife's name as the landlord I'm hoping the tax element can just be dealt with via my SA. Otherwise we might need an agent just to sort out the tax deduction... no doubt expensive
Aug 14th 2014, 4:07 am
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Re: Completing a P85 and possibly a NR1 form
P85 has been posted 
Re the NRL1 this part of the guidance notes was useful to me:
I've realised now that submitting the form actually causes less hassle for our tenants as without it they would have to withhold tax on half of the rental amount once I pass the point of being considered as having my place of usual abode outside the UK. If I've understood correctly, by submitting the form the tenants can continue to pay us as normal and HMRC will expect to reclaim the tax from me directly at the end of the tax year (although the amount should be within my threshold allowance anyway)
Hooray
Re the NRL1 this part of the guidance notes was useful to me:
Jointly owned property
2.7 Where a property is jointly owned and one or more of the joint owners has a usual place of abode outside the UK, the share of rental income attributable to those joint owners falls within the NRL Scheme. The share attributable to joint owners who do not have a usual place of abode outside the UK does not fall within the Scheme. For husband and wife joint-ownership cases, see paragraph 2.8 below.
Husband and wife joint-ownership cases
2.8 Where a husband and wife jointly own a UK property and both have their usual place of abode outside the UK, the NRL Scheme applies to both spouses and each is treated as a separate landlord in their own right. If the husband and wife both wish to receive the rental income with no tax deducted they must each complete a separate application form and send it to HMRC (see Chapter 11 below)
In such cases, letting agents and tenants should pay rental income with no tax deducted only to the spouse(s) named on the HMRC authorities they hold. Under no circumstances should they pay with no tax deducted to a husband and wife where they hold an authority to do so for only one spouse
But if only one of the spouses has a usual place of abode outside the UK, the NRL Scheme applies only to that spouse’s share of the rental income. The rental incme belonging to the UK-resident spouse is not within the Scheme and no HMRC approval is required to pay the income with no tax deducted.
2.7 Where a property is jointly owned and one or more of the joint owners has a usual place of abode outside the UK, the share of rental income attributable to those joint owners falls within the NRL Scheme. The share attributable to joint owners who do not have a usual place of abode outside the UK does not fall within the Scheme. For husband and wife joint-ownership cases, see paragraph 2.8 below.
Husband and wife joint-ownership cases
2.8 Where a husband and wife jointly own a UK property and both have their usual place of abode outside the UK, the NRL Scheme applies to both spouses and each is treated as a separate landlord in their own right. If the husband and wife both wish to receive the rental income with no tax deducted they must each complete a separate application form and send it to HMRC (see Chapter 11 below)
In such cases, letting agents and tenants should pay rental income with no tax deducted only to the spouse(s) named on the HMRC authorities they hold. Under no circumstances should they pay with no tax deducted to a husband and wife where they hold an authority to do so for only one spouse
But if only one of the spouses has a usual place of abode outside the UK, the NRL Scheme applies only to that spouse’s share of the rental income. The rental incme belonging to the UK-resident spouse is not within the Scheme and no HMRC approval is required to pay the income with no tax deducted.
Hooray
Aug 14th 2014, 6:20 am
#9
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Re: Completing a P85 and possibly a NR1 form
P85 has been posted
Re the NRL1 this part of the guidance notes was useful to me:
I've realised now that submitting the form actually causes less hassle for our tenants as without it they would have to withhold tax on half of the rental amount once I pass the point of being considered as having my place of usual abode outside the UK. If I've understood correctly, by submitting the form the tenants can continue to pay us as normal and HMRC will expect to reclaim the tax from me directly at the end of the tax year (although the amount should be within my threshold allowance anyway)
Hooray
Re the NRL1 this part of the guidance notes was useful to me:
I've realised now that submitting the form actually causes less hassle for our tenants as without it they would have to withhold tax on half of the rental amount once I pass the point of being considered as having my place of usual abode outside the UK. If I've understood correctly, by submitting the form the tenants can continue to pay us as normal and HMRC will expect to reclaim the tax from me directly at the end of the tax year (although the amount should be within my threshold allowance anyway)
Hooray
On a related issue I see that the UK government is proposing to scrap personal allowances for Non residents !
Aug 14th 2014, 7:27 am
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Re: Completing a P85 and possibly a NR1 form
Our tenants are not currently deducting tax as I have only just moved here. There certainly isn't any need for them to be withholding it from my wife.
I'm not quite sure but I don't think they are obliged to do so for me until I'm classed as primarily living abroad which seems to happen after about 6 months. This should provide sufficient time for IR to provide approval.
Ref: HM Revenue & Customs: The Non-resident Landlord Scheme
With regards to non-resident tax allowances here's hoping they continue!
I'm not quite sure but I don't think they are obliged to do so for me until I'm classed as primarily living abroad which seems to happen after about 6 months. This should provide sufficient time for IR to provide approval.
Ref: HM Revenue & Customs: The Non-resident Landlord Scheme
With regards to non-resident tax allowances here's hoping they continue!
Aug 15th 2014, 12:20 am
#11
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Re: Completing a P85 and possibly a NR1 form
So how does your wife sort out her tax on this income. Does she have to fill out her own tax form and include this income ?
Last edited by hong_konger; Aug 15th 2014 at 12:38 am.
Aug 15th 2014, 1:12 am
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Re: Completing a P85 and possibly a NR1 form
She just completes a standard self assessment, nothing special.
