tax advice
 

hi all, great forum. i need some help on tax. my situation is as follows. i moved to NY with my company in June and since i've not returned am now resident in the US for tax purposes for 04/05. my salary is still paid by my US company into my UK a/c.. to pay my rent and survive i use my ATM card. simple. i rented out my flat in london through an reputable agent. given the circumstances, do i pay tax on my income to the IRS also? if so, how do i claim it back in the UK since i'm taxed at source. do i declare my rental income to the Inland Rev? if so, do i claim it back on rent paid in the US. any info would be much appreciated as am struggling to understand it all. I will endeavour to offer out any advice i can.

Re: tax advice
 

Suggest you look in 'search' threads. This question comes up quite regularly. I cannot give you any answers but there is a lot of knowledge on BE and somebody will answer you. Check the threads first.

Re: tax advice
 

Hi, if you are overseas resident you need to let the Inland Revenue non-resident landlords office know, they will issue a certficate to your letting agent who should then stop deducting tax at source for your rent. You still need to pay tax at the year end (prepare small income statement and calculate tax actually due after expenses and personal allowance deducted rather than at 25% of rent).

Then you should declare the rent income (net of expenses) on your US return, noting the tax already paid in the UK, and it will be offset.

Re: tax advice
 

How do you get around/figure out the different tax year dates?

Re: tax advice
 

You estimate using a good old divide by 12 etc.,

If you are taxed in the UK at source then you can fix that by contacting the Inland Revenue with proof. For now, you will put this income and tax on your US tax forms and it will not be deducted twice due to the UK and US dual tax treaties. If I remember, my accountant just offset those UK taxes against the income as if it were in the USA, allowing me to benefit from the US tax rates.

Find a local accountant that understands the dual tax treaties (most do) and work with them - it's easier and in the past I've saved a bundle. I also used a UK tax accountant who would often make sure I utilized all my UK allowances against intest etc., - until I became a citizen that was.

Re: tax advice
 

There is a thread running in Immigration.

Not only are the tax rates different but the method of calulationg your net income is as well. US system appears more generous.

Double Taxation Treaty does not apply to rental income but as has been said you work out your US tax, accrue for your UK tax over the same period.

Assuming your UK tax is more than your US tax you take a credit and they balance off.

Re: tax advice
 

Rental income

Any profit you make from letting a property in the UK is taxable in the UK. Your letting agent or tenant must deduct tax from the rent unless the CNR (or previously FICO) has issued an authority for your property income to be paid without tax being deducted. Even if you receive the rent without deduction of tax, any profit you make from letting the property remains taxable in the UK. You can find out more about the Non-Resident Landlords scheme by clicking here.

Per Inland Revenue site

http://www.inlandrevenue.gov.uk/cnr/nr_landlords.htm

Re: tax advice
 

Thankyou everyone for your advice. much much clearer now.