non resident landlord scheme, rental income taxation help
 

Guys

I cant get a search on this but if anyone knows can you please point me in the right direction

I am a new soon to be expat and I have a house in the UK which I intend to rent out thus it will not be available for my use.

I have looked into the Non Resident Landlord Scheme which appears to apply to my situation - does anyone use this?

If so, I presume that because I am non-resident in the UK for tax that I am not entitled to a personal income tax allowance meaning all rental income would be subject to taxation. what rate would this be at, 20%?

It looks as though my tentant deducts 20% from the rent due and pays this tax direct to HMRC for me unless I am approved for the Landlord scheme?

Any pointers would be great, thanks

Re: non resident landlord scheme, rental income taxation help
 

You trust your tenant to pay 20% to the government?

Really?

Re: non resident landlord scheme, rental income taxation help
 

lol, there is no issue with trust there

Re: non resident landlord scheme, rental income taxation help
 

Not sure that's how it will work from April 1st, look at earlier information from Meow

Re: non resident landlord scheme, rental income taxation help
 

As a non-resident you are still entitled to a personal allowance, so only rental income above that level is taxable.

Your tenant does not pay the tax if you register for a Non Resident LL scheme, rather you receive income gross and are liable for any tax your self.

Other relevant info can be found on my financial blog - link below.

Re: non resident landlord scheme, rental income taxation help
 

Hi Meow, that's a really informative and useful blog you run there. I've just read your article on non resident landlord status - can mortgage payments be offset against your personal allowance? So if I receive 10k a year in rent from a UK property but my mortgage is 8k, am I only liable for tax on the 2k (which would fall within my allowance anyway)?

Thanks

B

Re: non resident landlord scheme, rental income taxation help
 

You can't off-set the whole mortgage amount from the rental income. You can only off-set the interest portion. With current low interest rates thats probably not very much ! The HMR tax form guide is very informative and provides all the information you need to know.

Re: non resident landlord scheme, rental income taxation help
 

Do you mean can rental income be part of your personal allowance? If so, yes. Rental income is UK income, but the gross amount can be reduced by both mortgage interest payments and some other costs.

http://www.hmrc.gov.uk/international/nr-landlords.htm


You know where I am if you want anything else :)

Re: non resident landlord scheme, rental income taxation help
 

Mrblast, i don't think you can offset your mortgage payments against your rental income. I think you can so something like that in Oz though?

Re: non resident landlord scheme, rental income taxation help
 

You can offset mortgage interest and various other associated costs.

Re: non resident landlord scheme, rental income taxation help
 

Yes but that's so little nowadays, I meant that I didn't think the whole payment could be offset. Not that I want a higher interest rate, mind!!

Re: non resident landlord scheme, rental income taxation help
 

Depends on the size of the mortgage and many people who let their property are being charged a higher rate of interest. Rates are very low compared to historical levels though.

Re: non resident landlord scheme, rental income taxation help
 

keep your builders invoices/receipts!!!

Re: non resident landlord scheme, rental income taxation help
 

What about council tax? If the landlord pays this, can it be partly or wholly used to offset income tax?

Re: non resident landlord scheme, rental income taxation help
 

Spooky. I've just had an email from someone with almost the same question.

Allowable expenses include:

• water rates, council tax, gas and electricity
• maintenance and repairs to the property (but not improvements)
• and contents insurance
• interest on a mortgage to buy the property
• costs of services, including the wages of gardeners and cleaners
• letting agents fees
• legal fees for lets of a year or less, or for renewing a lease of less than 50 years
• accountant’s fees
• rents, ground rents and service charges
• other direct costs such as phone calls, stationery and advertising for new tenants

The expense should be incurred wholly and exclusively as a result of renting out your property, but in many cases the tenant pays the council tax so it's academic.