Swei

My husband is British and I am non European.

1. We joint own two properties in UK and rent them out and the net income is about 8000 pounds.
2. He own some shares in UK and the dividends is about 6000 pounds.

As Spanish residents, we have to declare our worldwide income. Our Spanish accountant is doing now.

However, my husband think he got 10000 pounds personal allowance, so he wont pay any tax in UK.

But how about me? We got our rent to my husband's UK bank account. But I think my income is 4000 pounds.
Do we need to do anything with UK tax office?? If yes, how much tax I will have to pay?

Our Spanish accountant seems do not know enough about UK tax return since we live in a very old Spanish town.

Can any body give us some ideas and is there any good UK accountant in Orihuela Coast area and how much to do everything right in UK? We do not want to end up any penality.

mikelincs

You now live in Spain, so the only allowances you get are the Spanish ones, you should ensure that you have told HMRC that you are now resident in Spain, so they should not take any tax from you, all UK income should be paid gross and you just declare it in Spain.

Swei

Thanks and do you have similar situation? When I read the UK government website and I got very confused.

I also talked to a England lady here and she said I should not worry as long as I did not get any letter from HMRC.

Fred James

Sorry, but that is not correct. UK rental income is taxed in the UK irrespective of tax residency, but you usually get the normal UK personal allowances to put against it. It is also taxed in Spain, but you can offset any UK tax paid.

Dividends have 10% deducted at source and that all the UK tax you pay.

The only income that can be paid gross are pensions and investment income - in both cases you have to apply to HMRC for them to be paid gross.

Swei

Do you know any accountant who is good at this? We are new landlord and rent the flats from beginning of 2014 and did not do anything in UK yet. My husband believe his allowance cover the income and he does not need to do anything. I am non European and I may not get the personal allowance at all. Can you recommend any accountant to do the UK side?

EMR

Too late for some I know but why does not Spain follow the example of Portugal and introduce a scheme aimed at attracting retirees and early retirees who once qualified will pay NO tax on some income and max of 20% on other for 10 years.
It has really bought the property market back to life with retirees from many Northern Eurpean countries purchasing properties.
The scheme u
is called Non Habitual Residence .
But just as the Portuguese will always do the opposite of the Spanish I doubt that the Spanish will follow their example.

Fred James

That's correct. The whole question of allowances for non residents is under review at the moment. Non EU residents do not usually qualify but it is a complex set of rules.

Mustard

I don't think this is correct and I quote from the HMRC web-page

Use form NRL1i to apply to get your UK rental income paid without deduction of UK tax. This applies if you are an individual landlord of a UK property and normally live outside the UK. Normally, a letting agent or tenant deducts tax when paying rent to a UK landlord who usually lives outside the UK. The rent is not exempt from UK Income Tax and we may ask you to complete a UK Self Assessment tax return.

You will have to do a UK tax return but have the basic allowance of 10,000. You should of course declare your UK rental income on your Spanish tax return and pay the appropriate tax her according to your total income.

Fred James

I'm not quite sure which bit of my post you disagree with, but if you are referring to the last paragraph, what you say is a rather different issue, albeit a rather subtle difference. Pensions and investment income are paid gross because the DTA allows for that. It is done by giving you an NT tax code after asking HMRC to do so. There is no ongoing requirement to submit any form of declaration.

Rental income is different because tax is deducted by either the tenant or the agent. If you can satisfy HMRC that no tax would be due when your self declaration would be submitted, then, by special arrangement, the tenant or agent can be instructed to pay the rental gross.

The key points, which you confirmed, are that the rental income is taxable in the UK and that personal allowances (may) apply.

Mustard

Yes Fred, it was indeed the last paragraph I disagreed with. The poster can receive the income gross if they receive approval from HMRC.
With a net income of 8000 ( if that is their sole UK income) I assume that there would be no tax due in the UK. They would of course be liable for tax in Spain.
I am speaking from personal experience.

snikpoh

Not necessarily, all depends on other income levels etc.

They would certainly have to declare it though.

Swei

Thanks. The only question is we are joint owners of the two properties. So the income is split to 50/50?

When my husband paid these two properties, all the moneys were from his bank. All the rent is paid into his accounts too.All the ground rent and service charges are from his account too. I do not have a bank in Uk to manage this. He put my names just to make the future easier.

I suggest I give both properties to my husband ( He own both 100%). He gave all the shares to me. Then we both have no tax to pay in UK and I can enjoy my allowance here in Spain.

It seems unfair I only have a little bit income in Uk but cannot use my Spanish allowance. I do not have other income at all.