Self Assessment for Non Resident Landlords
UK Property Tax Specialists
0800 907 8633
Tax return forms are available free of charge from HMRC. We are independent accountants and not part of or affiliated to HMRC. We remove the stress and anxiety of preparing your tax return by completing and filing your tax return for you. We shall help you to pay the least amount of tax by advising you about the expenses which you are entitled to claim.
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UKLandlordTax.co.uk is the trading name of Thandi Nicholls Ltd Accountants Registered Office Creative Industries Centre Glaisher Drive Wolverhampton WV10 9TG Registered in England Company Number 7319439 Directors K W Nicholls FCA S S Thandi BA
When am I treated as non-resident?
From 6th April 2013 there are automatic tests to determine whether or not you are resident in the UK:
The automatic overseas test:
1.You were resident in the UK in one or more of the previous three tax years and are present in the UK for fewer than 16 days in a tax year; or
2.You were not resident in the UK in each of the previous three years and you are present in the UK for fewer than 46 days in a tax year; or
3.You leave the UK to carry out full-time work abroad, provided you are present in the UK for fewer than 91 days in the tax year and fewer than 31 days are spent working for more than 3 hours in the UK in a tax year,
You will automatically be not resident in the UK for that tax year.
The automatic UK test:
1.You are present in the UK for 183 days or more in a tax year; or
2.You have a home in the UK for a period of more than 90 days, are present in that home for at least 30 separate days during a tax year and there is a period of 91 consecutive days (some of which fall in that tax year) where you have no home overseas or if you have a home but have not been present in one home overseas for more than 30 days; or
3.You carry out full time work (over 3 hours per day) for a period of 365 days or more with no significant break (at least 31 days) and more than 75% of the total number of those work days are in the UK,
You will automatically be treated as resident in the UK.
If you do not meet either of the automatic tests then the following ties to the UK are taken into account:
Substantive employment/self-employment in the UK
UK presence in previous year
More time in UK than in other countries
What is the effect of being non-resident?
Generally, you are only assessed to tax on income received in the UK. The main exception is that if you work for the Crown, the income is taxable in the UK wherever it is earned. There are double tax treaties with some countries which means that some income received from the UK may be taxed in your country of residence and may not be taxable in the UK.
However, income from a property in the UK is usually taxed in the UK wherever you reside. If you are a married couple with net rental income of less than £1,917 per month and you have no other UK income, then you should not be liable for income tax because the income would be covered by your personal allowance, provided that this was available. British and EU citizens are entitled to the personal allowance. For other countries, you may be entitled to the UK personal allowance depending on the Double Tax Treaty.
Tenants or agents have a responsibility to deduct basic rate tax from any rent paid to non-resident landlords. If you wish to continue receiving UK rental income gross whilst you are non-resident, you should submit Form NRL1 to the HMRC Centre for Non-Residents. HMRC should then grant approval for rents to be paid to you gross and notify the tenant or agent as appropriate. Your rental profits will still remain taxable in the UK but this will help with cash-flow.
From 6th April 2015, if you dispose of a dwelling in the UK, you are liable to tax on the Capital Gain. If you purchased the property prior to 5th April 2015 then the gain assessable is only for the period from 5th April 2015 to the date of disposal. Private Residence Relief and Lettings Relief may be available if you have lived in the property at any time and the annual exemption is available to set off against the gain. If you owned the property on 5th April 2015, you can either:
1. Claim the market value of the property at 5th April 2015 against the proceeds of sale (the default position).The gain/loss is the difference between the sale proceeds (less costs) and the market value at 5th April 2015 (plus any enhancement expenditure after this date). If the property was your principal private residence at any time prior to 5th April 2015 then you can claim the last 18 months so effectively there would be no CGT unless the property was sold after 5th October 2016. In these circumstances, you would also be able to claim lettings relief as well as long as the property was let.
2. Elect to time apportion the gain over the total period of ownership and then the amount chargeable would be the portion which relates to after 5th April 2015.
3. Elect for the retrospective basis to apply which means that the whole gain/loss is taken into account. You may want to do this if there is a loss or principal private residence relief gives a lower gain over the whole period.
The elections in 2 and 3 are irrevocable once made.
If you are non-resident for less than five whole tax years any capital gains which you make on any other assets (which are not dwellings sold after 5th April 2015 or assets used in a trade in the UK) whilst abroad may be taxed in the year you return unless those assets were acquired and disposed after you became non-resident. Apart from dwellings sold after 5th April 2015/assets used in a UK trade and you returning to the UK within 5 tax years, there is no Capital Gains Tax if you are a non-resident.
YOU MUST MAKE A RETURN OF THE DISPOSAL OF THE DWELLING WITHIN 30 DAYS OF THE COMPLETION OF THE SALE. The return has to be made whether you complete a self assessment return or not. If you complete a self assessment return, the tax is due on the normal date of 31st January after the end of the tax year in which the disposal takes place. IF YOU DO NOT COMPLETE A SA RETURN, THE TAX IS DUE 30 DAYS AFTER COMPLETION OF THE SALE.
You should also confirm your tax reporting requirements in the country where you reside with a local tax adviser.
© Thandi Nicholls Ltd 2017 All Rights Reserved - The above article is provided for guidance only and may not cover your personal circumstances so you should not rely on it. It is important that you seek appropriate professional advice which takes into account your personal circumstances where you can provide the full facts of the case and all documents related to your case. Thandi Nicholls Ltd t/a uklandlordtax.co.uk, K Nicholls FCA or S Thandi cannot be held responsible for the consequences of any action or the consequences of deciding not to act.