Property income - gross or net income?
 

Dear Forum experts,

Just finished reading the Appendix 1 7 Financial Requirement and I am a little confused (and worried) and need your help;

We are looking to apply through the non-employment sources and cash savings route.

Each month we receive a monthly property rent minus the management fee from the estate agents looking after it. As we live abroad we have not paid any tax on this income as we do not pay UK tax and the rental income is less than the tax-free allowance (however, we don't have any documentation from HRMC to state this - a bit of an oversight by us!).

Also, if there are any maintenance costs (repairs etc) the estate agent deducts this amount before paying us the remainder. All payments go into my UK bank account.

So, taking the below passage into account, what documentation do we need to supply to prove the tax situation and when completing the application form should we calculate the rental income (1) gross, (2) gross minus the management fee or (3) gross minus management fee and repairs.

I am a bit worried as we will probably be under the financial requirement if it is number 3.


Here are the guidance notes:

6.1.5
The gross amount of any cash income may be counted towards the financial requirement, where the correct tax has been paid on that income and where all the relevant evidential requirements in Appendix FM-SE are met. Where a person’s relevant specified evidence relating to permitted sources of non-employment income shows their gross cash income and the tax paid, and their specified bank statements in relation to the permitted non-employment income show all of that post-tax income, they can count the gross amount of the cash income shown on the specified documentation towards the financial requirement (or the net income in relation to dividends). But, where that person’s specified bank statements relating to permitted non-employment income only show a proportion of that post-tax income, only the amount shown on the bank statements can be counted towards the financial requirement.


Many thanks in advance,

Arsenalfc.

Re: Property income - gross or net income?
 

You calculate (1) Gross income.

Presume repairs etc are taken out after Gross income is shown, so these deductions should be irrelevant.

Appendix FM-SE Clause 20 (cc) specifically states:

(cc) The amount of rental income from property received before any management fee was deducted may be counted.

https://www.gov.uk/guidance/immigrat...ified-evidence.

You have to deposit the full amount of income received each month.

Sorry, can help with the tax issue. As you do not pay tax in the UK, presume you pay tax in your current country, so present documentation to show that?

Re: Property income - gross or net income?
 

Having a think about the above situation.

Even though you are not ordinarily resident in the UK, should you not be paying tax in the UK based on your rental income OR at least have a tax return declaring the income even if you don't pay taxes on it.

https://www.gov.uk/tax-uk-income-live-abroad/overview

You would then have the necessary documents to show in your spouse visa application.

Re: Property income - gross or net income?
 

san diego girl is correct. property rental income in the Uk is taxable also for non residents, you need to regularise your postiion. the agents may know an accountant who can sort out the past years. You may not need to pay any tax but you still need to send in tax returns or the agents/managment company may need to deduct some tax at source.

Any tax you do pay may also be set off against any tax you pay in the country you live in, if a dual taxation agreement exists between it and the UK.

here is a link specifially re rental income and living abroad

https://www.gov.uk/tax-uk-income-live-abroad/rent

Re: Property income - gross or net income?
 

Thanks everyone for your replies, unfortunately, we don't have enough time to sort our tax situation out as we will be submitting early April, so we are going to add another bank account to the application so we will meet the minimum requirement (62.5k) so we will have cash savings for 6 months along with property rental income being net of repairs and management fees.

Considering the guidance states "But, where that person’s specified bank statements relating to permitted non-employment income only show a proportion of that post-tax income, only the amount shown on the bank statements can be counted towards the financial requirement"



Do you think this will be ok?

Re: Property income - gross or net income?
 

Hi Everyone,

We've contacted HMRC and registered, hope to get the self-assessment forms soon. We have completed a NRL1 form a few years ago and did not receive anything else from HMRC - hope to clear up our tax situation very soon!

Have a good weekend,

Arsenalfc