Tax on Irish rental income if living in UK - resident in UK since March for PAYE but 2024 for rental income

[Mothergoose]

I moved to UK in early 2023. I am resident there for PAYE purposes, but apparently not resident in UK for other income - rental and self-employed, until 2024. Do I need to make two tax returns - one to Revenue and another to HMRC, or do I just make one to Revenue this year for rental and self-employment income, and then to both Revenue and HMRC for rental and self-employment (Irish) income next year?

 

[jpd]

Rental income is taxed in the country where the property is - not where the owner lives

In fact, it is taxed in the owner's country as well, but tax paid in the country where the property is a tax credit in the owner's country

 

[RedOnion]

@Mothergoose
Yes, you'll have 2 returns.

It's important that you learn about not just tax residence, but also domicile and remittance basis of tax.
If you are Irish domiciled, you would normally only have to pay UK tax on any foreign income you bring to the UK.

You'll pay 20% tax in Ireland (assuming rental income is within standard rate band). But you'd have to pay difference between that and your marginal UK rate if you bring income to UK.

Tax on foreign income

Find out whether you need to pay UK tax on foreign income - residence and ‘non-dom’ status, tax returns, claiming relief if you’re taxed twice (including certificates of residence)

www.gov.uk

 

[Mothergoose]

Thanks JPD and RedOnion. That clarifies it. I better start trying to find an accountant near me in the UK who can do the HMRC return. The rental income will be 12000 - 6.5k in expenses and the self-employed income will be 4.2k with 2.7k expenses. I am Irish, so I presume domiciled in UK. I understand that from next year - when I am officailly resident in UK for both PAYE and other income, that I will be paying 20% tax on my rental income in Ireland? It sounds quite complicated submitting two tax returns each year - I wasn't aware when I moved that I would have to do this. I will probably just stop renting and leave the house in Ireland for family, or maybe sell and buy in UK, but I understand that that crates another complicated tax situation re CGT between Ireland and UK.

 

[RedOnion]

I am Irish, so I presume domiciled in UK.

You'd be domiciled in Ireland if your father was Irish. It's a complicated concept; you'd need to demonstrate that you plan to spend the rest of your life in UK, and possibly be buried there, to become UK domiciled.

If your UK income is all PAYE, it'll be a straightforward return.

You could earn your Irish income at 20% tax rate, rather than 40%.

Don't forget tax year is different in UK, running from 6th April, whereas ireland is 1st January.

 

[Mothergoose]

Thanks, RedOnion. My father was definitely Irish. Yes, all my UK income is PAYE, and I won't be remitting any of my Irish rental income to UK. I know the tax year's are different. I presume there is a date a month or so before the 6th April 24 when I will need to file a return. At least it's not until next year, so I have some time to look for an accountant.

 

[Gushering]

I've been in this boat recently. You will need to register with HMRC for 'self assessment' the year you are fully tax resident in the UK. Noting that the UK tax year started on 6th April you will probably be UK resident for the 23/24 tax year.

You will need to do both Irish revenue and HMRC returns going forward. I found it easier to do the Irish ones first then the UK ones. This is because you need figures from the Irish one to claim credit on Irish tax paid against any UK tax bill.

In practice I found I would pay 20% income tax on Irish rental income to Irish Revenue, then put the amount paid in as a credit on my UK tax return. Where the UK rules differ is on mortgage interest on BTL properties. In the Irish context you can 100% deduct mortgage interest expenses before calculating your tax liability, whereas in the UK it is calculated as a 20% tax credit (so not as helpful). In the end you probably pay slightly more in tax overall by having a rental property in Ireland while living in the UK so not an ideal situation unless your UK stint is time limited and not going to be open ended.

In terms of tax return, I found a number of online firms very helpful - TaxScouts and GoSimpleTax were pretty good at helping with Self Assessments for UK tax returns. Ultimately, no matter who you pay, you need to be over the detail of your situation in order to make the tax returns as effective as possible. They can only go on the data you give them.

Also note the new regime with Irish revenue for non-resident landlord withholding tax. This could be a real pain in the neck for you if you are a UK resident with an Irish property rented out.

 

[ellaqueenroad]

I've been in this boat recently. You will need to register with HMRC for 'self assessment' the year you are fully tax resident in the UK. Noting that the UK tax year started on 6th April you will probably be UK resident for the 23/24 tax year.

You will need to do both Irish revenue and HMRC returns going forward. I found it easier to do the Irish ones first then the UK ones. This is because you need figures from the Irish one to claim credit on Irish tax paid against any UK tax bill.

In practice I found I would pay 20% income tax on Irish rental income to Irish Revenue, then put the amount paid in as a credit on my UK tax return. Where the UK rules differ is on mortgage interest on BTL properties. In the Irish context you can 100% deduct mortgage interest expenses before calculating your tax liability, whereas in the UK it is calculated as a 20% tax credit (so not as helpful). In the end you probably pay slightly more in tax overall by having a rental property in Ireland while living in the UK so not an ideal situation unless your UK stint is time limited and not going to be open ended.

In terms of tax return, I found a number of online firms very helpful - TaxScouts and GoSimpleTax were pretty good at helping with Self Assessments for UK tax returns. Ultimately, no matter who you pay, you need to be over the detail of your situation in order to make the tax returns as effective as possible. They can only go on the data you give them.

Also note the new regime with Irish revenue for non-resident landlord withholding tax. This could be a real pain in the neck for you if you are a UK resident with an Irish property rented out.

@Gushering i found this post very insightful. I am an Irish citizen working full time in the UK with two rental properties. I have recently filed in Ireland at 20% tax rate and now preparing for my UK self assessment. I thought the max I’d pay is 20% and hence wanted to increase further investment in Ireland as a great source of passive income. Is there a formula that you use or a professional body that you could recommend so that I could better understand the ROI if I increase my property portfolio in Ireland? Thank you!

 

[Gushering]

@Gushering i found this post very insightful. I am an Irish citizen working full time in the UK with two rental properties. I have recently filed in Ireland at 20% tax rate and now preparing for my UK self assessment. I thought the max I’d pay is 20% and hence wanted to increase further investment in Ireland as a great source of passive income. Is there a formula that you use or a professional body that you could recommend so that I could better understand the ROI if I increase my property portfolio in Ireland? Thank you!

I think you would need to take tax advice on the ROI, but there are a lot of threads on AAM that can help you figure out the tax position of Irish rental property. The kicker is that you will still have to run the numbers on the Irish rental income under UK tax rules and pay HMRC tax on that, less any amount paid to Irish revenue first.

For me dealing with these tax points was completely self-taught while my family worked in the UK. Our stint in the UK was for a fixed period and we had rented out our Irish family home while we were away, rather than for investment purposes.