UK Tax and non resident landlord

[mattybe]

Hmm, I'm a bit confused. I left the UK and had a property empty and for sale. I completed a P85 and got a rebate on my tax as I left UK in October.

 

Now after the house being on the market and the uk housing market being poor, we have changed our mind and decided to rent.

 

 

Is an NRL form appropriate because at the moment we are getting taxed at 25% on the rental income, the house is under joint name with my wife who was a stay at home mum and never used her personal allowance. The rent we receive basically covers the mortgage and about £1000 annual profit which will be used to refurbish/maintain the uk property.

 

 

Do I need to do some form of self assessment ?

 

Any help appreciated. If I'd know I was going to rent I would have put it on my P85 but alas, things change.

[blobby1000]

There is a form you need to complete which means you dont have to pay the 25% on the rental income...

 

Its a non-residents form...

 

Then you have to only pay tax on any profit (minus mortgage, repairs, insurance, agents fees etc)

 

Your letting agent will know, if you dont have one you can call the inland revenue (they are actually incredibly helpful)

 

Im sorry I cant remember the name of the form but all ex-pats end up paying 25% on all collected rent if they dont fill in this form.

[Peach]

An NRL for is appropriate. And you will most likely be asked by HMRC to fill out an annual self-assessment tax return. You can obviously divide the costs and profits between yourself and your wife. One thing to be mindful of, is that only the interest part of the mortgage is tax deductible everything else is considered profit - so you may have additional tax to pay on your Australian tax return (where it will all need to be declared as overseas income).

[mattybe]

That's great...thank you so much for your help. I've completed the NRL1 form, I have had to fill one in for myself and my wife (house is in joint names). I've split the gross income between myself and my wife since its essentially 50/50 split on the land registry.

 

I actually read that you can only claim the interest part of the mortgage as tax deductable, I'm guessing that if the total profit is less than your annual allowable in the UK it just doesn't get taxed, then if you make any profit at the end of it you declare it as part of your australian tax return.

 

I know I should really sort an accountant, but my affairs aren't overly complicated.

[Gbye grey sky]

Even if there is no profit or no UK tax you probably still need to submit an annual tax return in the UK completing the Land and Property pages. Take into account that when you do eventually sell the house you may be liable to CGT on any profit. I am surprised that you say the UK market is weak. It's overheated here but obviously regional variations.

[mattybe]

Yeah its been weak up north, just started picking up as we were leaving but couldn't afford to just pay the mortgage and leave it sat there over winter.

 

Think I'll just get an accountant to sort it especially when we come to sell. I don't think we'll be liable in terms of CGT as we don't plan on buying here in Oz till the uk property sells. We also won't make any substantial gain on the property as we bought this house when prices were high so we'd break even (possibly make £20k from the 10-15k of renovations).

 

I just noticed Go Matilda do tax affairs, I'll contact them when the time comes, they have been super useful when inquiring about a visa for my mum.