UK rent and returns

[cathybun]

I'm buying a property in the UK and would appreciate if anyone could tell me what tax will be payable, and to which revenue. Do I need to submit a return to the UK revenue, even if I'm not liable for tax in the UK?

 

[RainyDay]

Will you be living/working in Ireland?

 

[cathybun]

Hi RainyDay, yes I'll be living and working in Ireland. It's purely an investment property.

 

[cathybun]

Sorry, I didn't make myself clear. I will be renting the apartment out.

 

[Ham Slicer]

Yes you will have to submit Non Resident tax return in UK - tax due or not. The UK tax yr is still April to April. So if you buy now your first Return is for 2005/06.

Credit will be given for any tax paid in UK.

 

[cathybun]

Hi Ham Slicer,

Can you tell me what rate of tax I will have to pay in the UK or Ireland? Will i need an accountant? Currently I am taxed as a married person. Don't know if this makes a difference, I'm boggled by tax! Thanks

 

[gongey]

cathy,

the rates of tax are incremental. the first £2,090 is taxed at 10%. between £2,090 and £32,400 the rate is 22% and over £32400 it is 40%.

as you are a non resident landord, tax will be deducted from the gross rent unless the appropriate form is filled in and submitted to the Inland Revenue.

however there is a form NRL1 that you can download I think from the Inland Revenue website which basically registers you as a non resident landlord and allows you to receive the rents gross. www.hmrc.gov.uk

the two benefits are that you will receive the rents gross, rather than nett of UK tax. You are still liable to UK tax but as Ham Slicer said you receive a credit for any UK tax paid against the Irish tax.

you can read in the website when the return in the UK is due and when tax is payable.

 

[cathybun]

Thanks Gongey. I had a look at the UK revenue site and I'm a lot clearer now. However, it's hard to see if the usual expenses that are tax deductible for UK residents is also available to non-UK residents. Any idea?

Can you please further explain the benefits of receiving the rent gross? Would it not be easier to let the letting agent deal with it instead of filling out forms? Or do you mean that if I did it that way the tax would not be credited against Irish tax?

 

[gongey]

receiving the rents gross is a cash flow benefit to you. remember the Uk will deduct the standard amount of income tax from your monthly rent, which may not after 12 months add up to your actual tax due. expenses of letting are similiar to that of Ireland.

regardless you're going to have the register in England, the letting agent will push you in the right direction. you'll still have to submit a UK return and tax if payable must be paid. but you do get the credit when submitting your Irish return.

the Uk returns are easy to understand as they really go into depth of what exactly you must fill out. so taking on a Uk accountant may not be necessary.