Taxed in the UK?
May 10th 2019, 3:30 pm
#16
Forum Regular
Thread Starter
Joined: Nov 2018
Posts: 60
Re: Taxed in the UK?
I found the form.
essentially if you rent a house out in the uk you do pay uk tax. Either its deducted by the estate agent or tennant when rent is paid, if you submit this form https://www.gov.uk/government/public...dividuals-nrl1
then no tax will be deducted and you’ll declare it on self assessment. So the other guy did this and then evidenced to hmrc he paid tax on the foreign btl income in canada on his worldwide income so hmrc took nothing and he was better off because he claimed back full expenses on the canadian tax return.
i presume if he didnt do this and paid uk tax without submitting the above form, he has to pay canadian tax in addition to then claiming back tax relief under the double tax treaty.
essentially if you rent a house out in the uk you do pay uk tax. Either its deducted by the estate agent or tennant when rent is paid, if you submit this form https://www.gov.uk/government/public...dividuals-nrl1
then no tax will be deducted and you’ll declare it on self assessment. So the other guy did this and then evidenced to hmrc he paid tax on the foreign btl income in canada on his worldwide income so hmrc took nothing and he was better off because he claimed back full expenses on the canadian tax return.
i presume if he didnt do this and paid uk tax without submitting the above form, he has to pay canadian tax in addition to then claiming back tax relief under the double tax treaty.
May 10th 2019, 4:17 pm
#17
Forum Regular
Joined: Jan 2019
Posts: 51
Re: Taxed in the UK?g
[QUOTE=Addzz120;12682119]
[QUOTE=Twitcher1958;12682065]
thank you that’s helpful , from lots of googling that my understanding too but I can’t work out the tax rate. appears it would just be whatever rate if income tax we are on . So I can just add this into a Canadian tax calculator and think tax is approx 30% (it doesn’t take any deductions into account but at least I know worst case) We have spoke to uk tax expert but also need one for Canadian end which is next week. Just like to have an understanding first. It’s only one property we are letting whilst on 2 yr secondment [QUOTE=Fraserl;12682061]
It’s all the interest on a canadian tax return. There’s no mention of partial interest claims like the UK.
Hence you could be better off claiming expenses on a canadian tax return than partial one with hmrc.
The guy i spoke to before claimed he filed a non resident landlord form to hmrc, which meant that tax was not deducted of his btl income by the estate agency. He then declared his btl income on the canadian tax form and claimed 100% interest so was better off for it. All he had to do then was declare his money was taxed in canada to hmrc.
This is what confuses me as although you can’t chose you tax residency, you appear to be able to technical do that by submitting said form. Maybe this is where theres a double tax treaty agreement and things get very complex. It you have several btl it may be worth checking out which would be more tax efficient as canadian taxes are progressive and it could throw you into the next tax bracket. Then despite claiming the interest this may make someone worse off still.
all speculatiom as this situatiom seems far more complex. I would consider paying 400 pounds or so to get an hour consultation and you could save yourself that money easily with the right advice
Hence you could be better off claiming expenses on a canadian tax return than partial one with hmrc.
The guy i spoke to before claimed he filed a non resident landlord form to hmrc, which meant that tax was not deducted of his btl income by the estate agency. He then declared his btl income on the canadian tax form and claimed 100% interest so was better off for it. All he had to do then was declare his money was taxed in canada to hmrc.
This is what confuses me as although you can’t chose you tax residency, you appear to be able to technical do that by submitting said form. Maybe this is where theres a double tax treaty agreement and things get very complex. It you have several btl it may be worth checking out which would be more tax efficient as canadian taxes are progressive and it could throw you into the next tax bracket. Then despite claiming the interest this may make someone worse off still.
all speculatiom as this situatiom seems far more complex. I would consider paying 400 pounds or so to get an hour consultation and you could save yourself that money easily with the right advice
May 10th 2019, 7:05 pm
#18
Forum Regular
Thread Starter
Joined: Nov 2018
Posts: 60
Re: Taxed in the UK?g
[QUOTE=Fraserl;12682145]
[QUOTE=Addzz120;12682119]
[QUOTE=Twitcher1958;12682065]
thank you that’s helpful , from lots of googling that my understanding too but I can’t work out the tax rate. appears it would just be whatever rate if income tax we are on . So I can just add this into a Canadian tax calculator and think tax is approx 30% (it doesn’t take any deductions into account but at least I know worst case) We have spoke to uk tax expert but also need one for Canadian end which is next week. Just like to have an understanding first. It’s only one property we are letting whilst on 2 yr secondment
I think we have it correct but your tax advisor will comfirm.
I use the ontario tax calculator. You add your employed income in and the btl income in ‘other income’, this groups the income ontop of each other so pushes you into the relevant tax bracket.
The deductions is done on the tax return, it will ask about foreign property and total expenses from interest, advertising etc.
if your house rents for say 10k a year, but 4k is mortgage interest you would report the income in ‘other income’ as 6k.
So effectively 4k of that isn’t taxable as it represents your allowed deductible expenses. So your tax would be salary plus 6k rental income. Then i believe you do your declaration to hmrc, they see it got taxed, take nothing and you’re done.
i could be wrong but i think this is essentially how it goes down. If your canada tax advisor says otherwise i would be interested to know if you were comfortable sharing the general process. Either way, it seems it would be more beneficial to be taxed in canada and submit the non res landlord form to hmrc. The Conservatives have gone to war with landlords here on stamp duty and mortgage interest deductions. It would be pleasing to have confirmation this is the process so we can escape the harsher conservative policies! 😁
thank you that’s helpful , from lots of googling that my understanding too but I can’t work out the tax rate. appears it would just be whatever rate if income tax we are on . So I can just add this into a Canadian tax calculator and think tax is approx 30% (it doesn’t take any deductions into account but at least I know worst case) We have spoke to uk tax expert but also need one for Canadian end which is next week. Just like to have an understanding first. It’s only one property we are letting whilst on 2 yr secondment
I use the ontario tax calculator. You add your employed income in and the btl income in ‘other income’, this groups the income ontop of each other so pushes you into the relevant tax bracket.
The deductions is done on the tax return, it will ask about foreign property and total expenses from interest, advertising etc.
if your house rents for say 10k a year, but 4k is mortgage interest you would report the income in ‘other income’ as 6k.
So effectively 4k of that isn’t taxable as it represents your allowed deductible expenses. So your tax would be salary plus 6k rental income. Then i believe you do your declaration to hmrc, they see it got taxed, take nothing and you’re done.
i could be wrong but i think this is essentially how it goes down. If your canada tax advisor says otherwise i would be interested to know if you were comfortable sharing the general process. Either way, it seems it would be more beneficial to be taxed in canada and submit the non res landlord form to hmrc. The Conservatives have gone to war with landlords here on stamp duty and mortgage interest deductions. It would be pleasing to have confirmation this is the process so we can escape the harsher conservative policies! 😁
