gryphea

Well - this is what I kind of suspect!!!!!! so I think I am going to dig further! Won't have time until weds- but when I do I will post back here with what I have been able to discern!

Gryph

expatadvisor

Perhaps if you seek further advice then contact the inland Revenue, St John House in Bootle (sorry have mislaid the phone number), as these are the people who deal with the matter of expat rental incomes and non resident landlords, most accountancy firms I know are clueless in this area. I used to have a hotline their at one time but now most returns we do are done online. Good luck with your digging.

gryphea

Thanks- it was the overseas specialist IR people I contacted before. I am clear on the rental income - its the UK capital gains side of things and because UK tax ratio years rather than take market values as the canadains do we want to make sure we don't jeopardise any capital gain we have already made- this difference in the systems is quite important if the UK market stays flat. If it was flattish for a few years we could sell and end up paying capital gain on gain we have made up until now, whereas in canada we wouldn't as the value wouldn't have gone up! In some ways we don't mind paying capital gain on any future gain- afterall that seems a fair cop, but we don't want to in any way jepardise our current gain, which is atm cgt free

Gryph

JonboyE

This intrigues me. My understanding of the UK/Canada tax treaty is that each country retains the right to tax income such as capital gains arising in their territory. E.g. A Canadian tax resident makes a capital gain in the UK and must pay UK capital gains tax. They then include the gain on their Canadian income tax return, but deduct the UK tax paid from their tax liability.

I can't understand why the UK government would willingly give up their right to tax a capital gain arising in their territory. It doesn't seem to pass the common sense test you applied earlier.

Cynthia2007

Linda,

Thanks for the warning. Today I spoke to a rental company for the first time and planned a year lease of our flat. What rental company were you with? We are thinking of using Black Katz as our neighbour did.

Linda P

Sorry for the late reply.....We used Jigsaw Letting which is in Selby.

It's so strange, because this week out of the blue they have contacted us....they informed us that we owe the Inland Revenue £1973 in taxes and said we had until 10th October to pay or we would have penalties added .....they had my cell phone and wanted me to give them my new address ......I don't think so They also commented that they had my bank details, I informed them that it didn't matter as the account is closed
I rang the Inland Revenue, as it turns out Jigsaw should have been charging us tax per month and then every quarter they should have been paying the tax office. A little matter that seem to have slipped their minds......I was asked for my NI numbers and was told that as we had not earned in the UK since April 2005, even if we had been paying it, we would have got it back. So all we needed to do was confirm the details in an email and then the Inland Revenue would not charge Jigsaw for our amount. They also warned us not to pay anything to jigsaw as they were being audited and we were not the only ones that this was happening to...... any penalties that would be added were Jigsaws not ours and they could not charge us for them....this was a result of their bad accounts !!!!
Apparently Jigsaw should have gone through all this in the beginning with us and informed us to contact the Inland Revenue.....Yes the Tax was ours to pay, but this should have been done monthly.

We declared and paid tax on the property here in Canada, so we didn't think it had to be declared in the UK aswell. Although now I have to admit I should have checked.

Our house was sold in December 2006, so you can imagine we were a little shocked this has come up now!!!!

Linda

gryphea

There is a form that you need to sign as a non-resident landlord. if the IR don't have the form your letting agent is responsible for deducting tax at source on the entire income. Once you have signed the form you are still liable for tax , but you won't overpay.

Ps on the CGT matter I posted a separate thread
Gryph