Hi all,
I've been browsing these forums in preparation for my move to Australia, but have joined up now I'm here.
I’ve been looking into how I should deal with income from a rental property in the UK, with regard to the tax that needs to be paid.
I’ve recently moved to Australia on a 457 visa, and before doing so I applied to have my rental income paid to me untaxed (the NRL1 form) which was accepted.
So, £800 is paid into my UK bank account monthly, untaxed. For the sake of simplicity, let’s assume that my monthly mortgage interest / agent fees etc on the property come to £400, so I have a
taxable income of £400 per month.
My understanding is that I am now a ‘Resident of Australia for tax purposes’ but as I have a UK passport, I still qualify for a ‘Personal Allowance’ of £10,000 (for the 2014/15 tax
year).
I’ve read through the UK and Australian Taxation rules for this, but there seems to be a lot of ambiguity and even conflicting statements.
I have a few questions which hopefully people who’ve been through this before will be able to assist with.
1. Do I have to fill in a UK tax return?
The HMRC's 'Filing a tax return if you live or work outside the UK' webpage - www.hmrc.gov.uk/international/tax-return.htm - states that, for Non-Resident landlords
“You will need to complete a tax return if: the annual rent you have received is higher than your 'Personal Allowance' (this is the amount of UK income you can receive tax free)”
As both the amount I receive annually from rent (12 * £800 = £9600) and the net income (12 * £400 = £4800) are below the threshold, the above suggests that I don’t need to, but most other discussions on the subject I’ve seen say that I do.
2. Do I have to declare the income in Australia when it comes to tax time? And if so, how do I make sure that I don’t pay tax on it (ie how do they know that I've used my UK personal allowance to cover it).
3. I’m working in Australia and therefore receive a Personal Allowance for tax here. So by using the UK PA to cover my rental income, I’m effectively getting 2 lots of PA. Is this correct / legit?
4. Would the type of visa that I’m on make a difference? Ie, would the answers to the questions change if I became a Permanent Resident?
Sorry for the first post with so many questions, but I’m getting very confused by this, and would like to get it right!
Cheers
Michael
