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bigduckontax
bigduckontax, Accountant
Category: UK Tax
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I and my civil partner live in italy, the situation

Customer Question

Hello,
I and my civil partner live in italy, the situation is the following:
a. we have a small property in the uk, a maisonette, with a monthly gross rental of 450 pounds, (we share ownership 50% each),
b. both my partner and I have sent one month ago to HMRC a form NRL1 each to attain Tax exemption, we believe we are both entitled to it as he is uk citizen and I am itlian citizen living in the EU.
The situation evolved in that he got the tax exemption (the notice was sent to our estate agent) while I am not sure whether it is taking more time because I am italian or what.
After saying all the above, the question is: I am I as a italian landlord, living outside of the uk, entitled to such tax exemption? What is the next action we may need to do?
Thanks in advance.
Kind regards,
XXXXX
Submitted: 1 year ago.
Category: UK Tax
Expert:  bigduckontax replied 1 year ago.
Hello XXXX, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
Quite frankly your question does, in tax terms alter the price of cheese as my old boss was wont to say! Your share of the rental is 450 x 12 / 2 = 2700. As an EEA citizen you are entitled to a Personal Allowance of GBP 11600 before any UK income is subject to UK taxation. From your rental income can be deducted the following [source Which]:
'The most common types of expenses you can deduct are:
Water rates, council tax, gas and electricity
Maintenance and repairs to the property (but not improvements)
Contents insurance
Interest on a mortgage to buy the property
Costs of services, including the wages of gardeners and cleaners (as part of the rental agreement)
Letting agents' fees
Legal fees for lets of a year or less, or for renewing a lease of less than 50 years
Accountant’s fees
Rents, ground rents and service charges
Direct costs such as phone calls, stationery and advertising for new tenants
The expense should be incurred wholly and exclusively as a result of renting out your property.'
So you can see there are a lot of allowable deductions which can reduce the taxable element of your share of the rental. If you are now below GBP 2500 in a year you do not need to make an UK Self Assessment Return, if over you do though HMRC may well, after your first declaration, tell you not to bother in future.
Frankly, as far as UK Income taxation you have nothing to worry about. Your situation regarding Italian Tax is b beyond the scope of this site which is essentially an UK tax information forum. A glance at this web site:
http://www.telegraph.co.uk/finance/personalfinance/expat-money/10320208/Expats-in-Italy-hit-by-new-taxes-and-reporting-rules.html
indicates that the Italian tax authorities are tightening up in this area and this income could well have to be declared to Italian authorities.
I do hope that I have been able to set your mind at rest regarding the UK taxation position.

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