Tax on rental income

honada

Hi

Are foreigners liable to pay tax on income from rented property in the uk, I have tried to find any information with regard to this issue but all what I can find is related to non residents and nothing is mentioned on non British citizens as well as non residents.

Any advise is appreciated
Thanks

Jmann

Short answer yes, non residence landlords are subject to uk taxation on income from rented property in the uk.


This might help you.

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

honada

Many thanks for your help

honada

Hi

I have checked the website attached and still could not find an answer with regard to non British citizen, my theory is if a British citizen owns and rent a property in Spain he/she are not liable to pay tax to the Spanish authority, but liable for UK taxation, therefore I would assume that a non British citizen and
never lived in the UK should not be liable to UK taxation.

Thanks

jamesm96

honada wrote: »

Hi

I have checked the website attached and still could not find an answer with regard to non British citizen, my theory is if a British citizen owns and rent a property in Spain he/she are not liable to pay tax to the Spanish authority, but liable for UK taxation, therefore I would assume that a non British citizen and
never lived in the UK should not be liable to UK taxation.

Thanks

Hi Honada,

The main issue here is one of residency; citizenship doesn't really come in to it (n.b. the three criteria as far as international tax is concerned are 1. Residence, 2. Ordinary Residence and 3. Domicile)

So someone who is a UK Resident (there are various means by which a person may classify as Resident, but that's a whole other thread) has to pay UK tax on his / her worldwide earnings. Someone who isn't a UK resident only has to pay UK tax on income that's earned / generated in the UK.

So, if your client's rental property is in the UK then he'll be required to pay UK tax on it. He'll get Double Tax Relief so he won't pay any higher tax than whichever country has the highest rate of tax, but you obviously need to make sure the right amounts are paid in the respeive countries.

How many days does your client spend in the UK in n average year?

honada

He spends around one to two months a year
Thanks for the help

jamesm96

honada wrote: »

He spends around one to two months a year
Thanks for the help

And, apart from the property he owns here (by the way, does this have a long term tenant in it?), does he / she have any other links with the UK?

honada

Hi

Yes there is a long term tenant arranged through an estate agent, he has already applied for Non resident scheme so that the agent does not deduct tax and submit a self assessment for last year, which I thought just for reporting and controlling but was not aware that there is a tax element applied.

thanks

deanshepherd

You may also have to look at the tax treaty between the UK and the country in which he is resident to determine whether there is any special treatment to be applied. These treaties do not always follow logic.

jamesm96

deanshepherd wrote: »

You may also have to look at the tax treaty between the UK and the country in which he is resident to determine whether there is any special treatment to be applied. These treaties do not always follow logic.

I was convinced that honada had said he was in Spain but I must have imagined it!

honada

I have contacted several departments in HMRC and as usual it is an area that is complicated with different aspects, yes there is a tax treaty in place therefore the landlord has to pay tax after allowance but I should have ticked the box for personal allowance on the Self Assessment submission form.

thanks for all the help

honada

Good morning

I have finally managed to get to the bottom of the income tax for rented property to non nationals, after being in contact with HMRC different departments I was directed to search for taxation treaty between countries where the information provides detailed analysis for each country with the taxation rate of different categories of income.

Many thanks for all your help

Honada