uk2sba

I'm trying to file my own tax return for 2013/2014 with HMRC. I'm a British citizen but classed as non-resident in the UK as I've been out of the UK for nearly 2 years. In 2103 I filed US taxes as a US Resident and will do so for 2014.

I have a property in the UK which I receive rental income from in the UK only and it stays in the UK. This is the only UK income I receive. I do not transfer any US money back to the UK.

One of my many questions, should I still receive the personal allowance of 10K before paying tax on my UK income?

Thanks for any advice

nun

Yes, you still get your personal allowance because you are a UK citizen.

I assume that you have paid US tax on your UK rental income and that you will be taking a foreign tax credit on your UK taxes.

uk2sba

Thanks for the reply nun. I wasn't planning to take foreign tax credit as the income from my UK property does not exceed the 10k allowance so I won't owe any UK tax.

Would there be some other reason to take foreign tax credit?

nun

I don't kno the situation forreign tax credits in the UK, but on US taxes you can use excess credits in later years, but if no UK tax is due anyway you might not be able to use the foreign tax credit. Probably not worth worrying about if your UK personal allowance covers you.

uk2sba

Thanks nun, that was my line of thinking to.

Cook_County

You'd still have to be registered as a non-resident landlord, submit an annual SA return and possibly want to start thinking about the CGT changes from 6 April 2015.

JAJ

You cannot take a foreign tax credit unless you have paid/accrued some foreign tax (either in current year, or in some cases, prior years). So in general, as long as the personal allowance covers your rental profit, your U.K. tax is zero and you just pay the full amount on your U.S. tax return.

Make sure your depreciation calculations are correct.

Looking ahead, the British government has signaled an intention to restrict or remove the personal allowance from most non-residents. However, latest news is that this is deferred to at least 2017. If/when that occurs, you would likely then have a U.K. tax liability and would need to take advantage of the foreign tax credit.

Someone has mentioned the U.K. capital gains tax rule change for non-residents coming up in April 2015.

For the long term, be aware that the property will always be subject to U.K. Inheritance Tax, even if you are (or become in future) non-domiciled.

uk2sba

Thanks JAJ. Very useful info.