I have been allowed by HRMC not to have tax deducted by my letting Agent in UK. I have permanent residency in Spain and am paying tax on my occupational pension. I believe I have to declare ALL worldwide income to Spanish Tax authorities. All guidance on UK taxation says I have to pay UK tax on my rental. So am I going to have to pay tax twice? I have now received a letter from HRMC saying I have to fill in a self-assessment income tax form. I am about to declare my rental income to Spain for last year, so I don't know what to do. I only started receiving rental UK income last October
System of Law: England-and-Wales
HRMC, GOOGLE, Global Property Guide
Thanks for your question
As the rental property sits in the UK and the income arises in the UK, you remain liable to UK tax on this rental income.
You have been awarded the right to use the Non residents landlord scheme, which allows your rents to be paid without deduction of tax each month, but you still will have to fill in a self assessment tax return after each 5th April, and tax might be due if the net rental income is in excess of your personal allowances.(as you are still due this to use against any UK income arising)
If you then do suffer UK tax, then under the double taxation agreement we have with Spain, you then declare the income and any UK tax suffered, so you are not charged tax twice on the same income.
So, I can fill my tax return online. What UK allowances am I allowed and am I allowed to claim for things such as Factors' bills (upkeep of common owned gardens etc.) and for letting agents fees and anything they or my tenants have had to pay out? I had to renew gas boiler at a cost of £1000+. I suspect my net income of £315 a month will be below my personal allowance in UK, so then will I declare this to Spain as it will be added to my other pensions and will end up being taxed at 24%.
Thanks for your additional questions (these really should have been listed as a new question, as additional to the original topic)
No you cannot file this tax return online, as you will have a UK income from property bill and a residency page, and as yet HMRC free online services cannot support the file of the residency page.
So you will either have to use third party software that supports a residency page, or an accountant that has the software to do this, or get the return filled in (paper return) and back with HMRC by 31/10/2012.
You are due the personal allowances still if you are a British Citizen, this is determined by your age (and if over 65 your annual income)
You can claim all expenses arising with renting this property out, such as letting agents fees, maintenance, repairs, service charges, etc etc
The gas boiler would not be reclaimed against the rents but against the capital gains when the property is sold, as this is deemed to be a capital cost.
You will need to check with the Spanish tax authorities or a local Gestor as to whether this income has to be declared as this is a UK tax forum, and we are experts in UK tax
You may find that you have no need to declare this, but as you are now a resident in spain, I would imagine that you do have to declare all income remitted into Spain and therefore may find that you pay tax on this income, where as it remains tax free in the UK due to your award of personal allowances.
So do seek local advise in Spain
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