ItchyFeet76 Posted November 12, 2013 Share Posted November 12, 2013 Hi there, Does anyone know if we would be entitled to the UK tax-free personal allowance (of £9'440) if we move to Aus and rent our UK house out? I'm trying to work out how much 'profit' we'd make (actually none because most of our mortgage is repayment, unfortunately this can't be counted so it looks like our mortgage is a paltry £150 pcm! But I digress...) as I understand that we don't pay tax if it's less than £9'440. But now I'm wondering if we'll be penalised for leaving the UK by having to sacrifice the tax-free personal allowance... Thanks, I-F :confused: Link to comment Share on other sites More sharing options...
Gbye grey sky Posted November 12, 2013 Share Posted November 12, 2013 You are subject to the tax rules where you are resident so if you are living overseas you do not get the UK tax free allowance. Link to comment Share on other sites More sharing options...
Gbye grey sky Posted November 12, 2013 Share Posted November 12, 2013 Actually should qualify my last answer. The UK tax allowance is applied to UK earnings but then you declare the income in Oz so pay tax at the relevant rate there anyway so the allowance is more or less academic really. Link to comment Share on other sites More sharing options...
ItchyFeet76 Posted November 12, 2013 Author Share Posted November 12, 2013 But we won't be declaring our UK rental 'income' on our Aus tax return as we'll be on a 457 visa. So do we still not get the personal allowance...? Link to comment Share on other sites More sharing options...
Gbye grey sky Posted November 12, 2013 Share Posted November 12, 2013 On a 457 I believe UK income does not need to be declared on Aus tax return but others may know more. If so you will benefit from your UK personal allowance on your rental income. Link to comment Share on other sites More sharing options...
ItchyFeet76 Posted November 12, 2013 Author Share Posted November 12, 2013 No, that's what I heard too. That's why I wanted clarification about the personal allowance thing... rather confusing, isn't it?! Thanks for replying anyway :-) Link to comment Share on other sites More sharing options...
Notts Posted November 12, 2013 Share Posted November 12, 2013 UK citizens are generally entitled to the UK personal allowance regardless of where they live. Link to comment Share on other sites More sharing options...
wolvesaussie Posted November 12, 2013 Share Posted November 12, 2013 But if you are living in Aus for good you have to declare overseas income on your tax return and if it hasnt been taxed already you will be taxed on it. Link to comment Share on other sites More sharing options...
carlhall Posted November 12, 2013 Share Posted November 12, 2013 When I moved to Australia I was being paid a private pension, I was entitled to the full UK tax allowance before paying tax to the UK, When I became liable for tax in Australia i still got full UK tax allowance until I filled in the forms to inform the tax office I was now under Australian tax for payments and then My UK tax liability stopped as You can only pay tax in one country (Normally). It does not matter where you live if you are a UK tax payer you get the UK tax allowance.... Link to comment Share on other sites More sharing options...
ItchyFeet76 Posted November 13, 2013 Author Share Posted November 13, 2013 Carlhall - I'm a bit confused by what you said. So as soon as you told them you were paying tax in Aus, you no longer got the allowance? My husband will be on a 457 so paying Aus tax (but won't have to declare UK rental income due to temp visa), and we won't be in Aus permanently (can only stay max 4 yrs unless we go or PR). So am I right in thinking we would still get to keep the allowance so long as we are on a 457, but if we get PR we'll lose it...? Thanks in advance :-) Link to comment Share on other sites More sharing options...
Alaska Posted November 13, 2013 Share Posted November 13, 2013 We are on a 457 and have 2 rental properties in the UK. Yes, we still got the tax free allowance in the UK. One of the few advantages of being on a 457 although the profit was small! As I understand it, if we get PR we will then declare it on our Australian tax return and be taxed on that income here. Link to comment Share on other sites More sharing options...
Rupert Posted November 13, 2013 Share Posted November 13, 2013 Hi there, Does anyone know if we would be entitled to the UK tax-free personal allowance (of £9'440) if we move to Aus and rent our UK house out? I'm trying to work out how much 'profit' we'd make (actually none because most of our mortgage is repayment, unfortunately this can't be counted so it looks like our mortgage is a paltry £150 pcm! But I digress...) as I understand that we don't pay tax if it's less than £9'440. But now I'm wondering if we'll be penalised for leaving the UK by having to sacrifice the tax-free personal allowance... Thanks, I-F :confused: Well your cash flow might be low, but somebody is making those mortgage repayments for you, so you are definitely profiting. :biggrin: And the good news is that yes if you are British you will definitely get your UK personal allowances and yes if you are on a 457 visa you do not have to declare it on your Australian tax return. So it is a definite win for you as a 457 visa holder. Link to comment Share on other sites More sharing options...
Alan Collett Posted November 13, 2013 Share Posted November 13, 2013 Actually should qualify my last answer. The UK tax allowance is applied to UK earnings but then you declare the income in Oz so pay tax at the relevant rate there anyway so the allowance is more or less academic really. It is not academic. It is important, given that HM Revenue in the UK will almost certainly require the completion of a UK tax return if the OP does as s/he ought, which is to register in the Non Resident Landlord Scheme in the UK. Being in the NRL Scheme usually results in a UK tax return being issued. The UK personal allowance - to which one is entitled if the taxpayer is a UK citizen (residence has nothing to do with the entitlement to a PA in the UK) - is then claimed via the Residence supplement to the UK tax return. In case of need: http://www.gmtax.com.au Best regards. Link to comment Share on other sites More sharing options...
ItchyFeet76 Posted November 13, 2013 Author Share Posted November 13, 2013 Thanks Alan. I came on here to post an update but it seems my question has already been answered by both yourself and a few kind others :-) I spent 90 mins with my bank manager this afternoon, clarifying what I thought the situation was. He confirmed we pay an extra 1.5% on each mortgage (we have 3 on this property) plus a one-off £30 upfront fee; we can extend the mortgage term to 35 years (with a one-off upfront £20 fee) to make the rent cover our mortgage; and best of all (and this contradicts what the call centre lady told me when I rang Nationwide a while back) we CAN fix the mortgages whilst abroad! We were concerned about the base rate rising whilst away, as one of our products doesn't end until Dec 2015, but he confirmed we can fix from abroad AND do it up to 3 months in advance. I also rang HMRC (not having been on here to see that you guys had already provided the answer) and she confirmed that, yes, we do indeed still received the TFPA and would continue to do so even if we were permanent residents. So I'm a happy bunny :-) Link to comment Share on other sites More sharing options...
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