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Sam
Sam, Accountant
Category: UK Tax
Satisfied Customers: 12814
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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Hello I currently live in HK but have a rental property

Resolved Question:

Hello

I currently live in HK but have a rental property in London
The property is rented out for 2200 per month and the interest payments are around 750.

This means i am now making 1450 per month on the property so 17400 annually.
The property is in my name but i am married.
I am going to start doing self assessment but can my wife also do self assessment and we each submit a value of 8700 i.e. half of the 17400 received from the property rental?
What is the minimum amount one can earn without paying tax?
Submitted: 10 months ago.
Category: UK Tax
Expert:  Sam replied 10 months ago.

Hi

 

Thanks for your question


Unless the property is in joint names, then I am afraid the total rental income, and relevant expenses must be declared by you.

Then the first £9440 is tax free assuming you are a UK citizen (as you are still entitled to UK personal allowances, despite not being UK resident) then the remainder would be liable to 20% tax.

 

I should also point out, that the tax should be deducted from the rents unless you have registered for the non resident landlord scheme - I have added a link here that advises more on this topic, but as you can see, either the tenants (or managing agent if you have one) should be making these deductions and paying them over to HMRC (and then you claim the tax paid on your self assessment tax return)

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

 

The only way that you can have your wife be responsible for half the rents (and expenses) to then utilise another £9440 personal allowances (which would render the net rental income tax free) is to transfer half the property into her name.

 

But as things stand, you are the one responsible for the full declaration of this rental income and associated expenses.

 

Do feel free to ask any follow up questions.


Thanks

 

Sam

Sam, Accountant
Category: UK Tax
Satisfied Customers: 12814
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
Sam and other UK Tax Specialists are ready to help you
Customer: replied 10 months ago.

Thanks Sam,


 


Very helpful and quite frightening at the same time.


Given that i didn't know about this I am now in a situation.


I have looked at your link and its massive. I've never heard of tennants paying the tax directly and trying to understand such a large document is intimidating to say the least.


I thought i just had to file self assessment and say im getting X amount per year from the rent and then pay the amount owed!


Do you think i need a Tax Lawyer to help get me out of this mess?


 


 

Expert:  Sam replied 10 months ago.

Hi

 

Thanks for your response

 

Its very straight forward (despite the size of the information provided) but you could engage an accountant if you do not have a managing agent - if you have a managing agent, they should be very familiar with the non residents landlord scheme and should have guided you on this.

Have you a managing agent ? And when did the rental income begin?

When did you leave the UK and how long do you plan to remain out of the UK?

 

 

 

Thanks

 

Sam

Customer: replied 10 months ago.


Ok Well I do not have a rental agent - (I did the rentals myself)


I have been out of UK for 2 years now when the rentals began.


I have no immediate plans to come back to the uk alteast for the next 3 years.


 


So you think an accountant could put all of this in line for me without the need for legal representation?


 

Expert:  Sam replied 10 months ago.

Hi

 

Thanks for your response

 

The yes an accountant is a good idea, as they can advise you fully on the process of either

1) Instruct you for tax to be deducted and paid over to HMRC (either through liaison with the tenants or advise you what to instruct the tenants to do, as this action usually is only performed through a managing agent making the correct tax deductions and any other charges from rents they receive and before they pass the balance to you OR you arrange directly with the tenants to pay the 20% tax deduction - so in essence pay you 80% of the rents and 20% of the rent to HMRC to represent the tax deduction) and more importantly

2) Arrange with you for the application for the Non Residents landlord scheme so that the rents can be paid free of tax, and you just basically carry on as you are

 

Thanks

 

Sam

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