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Do you have to do a tax return for renting out home in the uk?

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Hi there,just wondering if you rent your property in the uk out are you supposed to do a tax return for it

any info appreciated


vetasess received 21.3.12,passed level 1 2/3/12

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Hi there,just wondering if you rent your property in the uk out are you supposed to do a tax return for it

any info appreciated

Yes, you are. We take evidence of the rent coming in and then the tax agent takes off our agent fees, any outgoing against the property, like repairs and insurance, and then the interest payments on our UK mortgage. What is left is converted to AUD and added to your income for tax to be paid.

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Of course, you must declare all income but as has been said you can offset some of it like the interest on your mortgage payments. Only the interest though, sounds obvious but many try to claim for the whole mortgage payment!

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I would have thought there's a double taxation arrangement so you wouldn't pay tax in UK?

 

Also, if all the income remains domiciled in UK, would the ATO have any way of knowing it was there?

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I would have thought there's a double taxation arrangement so you wouldn't pay tax in UK?

 

Also, if all the income remains domiciled in UK, would the ATO have any way of knowing it was there?

 

The double taxation agreement actually means that you pay tax in the UK first (because the property is in the UK) but then can offset that tax against the Australian Tax. The income (and related expenses) is on both tax returns (although different rules apply to expenses in the two countries so amounts may be different even after adjusting for the different year ends). However most people are able to claim the UK Tax Free allowance and so pay no tax in the UK so have nothing to offset against their Australian tax bill. HMRC now demand the foreign Tax File Numbers of tax payers with addresses outside the UK which allows for easier sharing of information.


Chartered Accountant (England & Wales); Registered Tax Agent & Fellow of The Tax Institute (Australia)

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At the risk of adding complication, if you're on a temporary visa then foreign earnings are not taxable in Australia AFAIK. This would apply if, say, you were on a 457 and renting out your UK property

 

Same goes for capital gains. Your start point for liability is the day you get PR (if you are doing so). But if you are PR and later dispose of said property in the UK then you need to declare any capital gains for CGT as well

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As others have said before, you have to submit a UK tax return each year for UK rental income. As our property is in mine and my wife's name and we were advised by the UK tax helpline, when we initially inquired as to how it worked, that we split the costs (agent fees, repairs, insurance etc.) and the profit 50/50 between us and it always comes out below our personal UK tax allowances.

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Worth mentioning to all you out there with BTL properties, make sure you are up to date on the new tax rules that are being introduced from next month. They include not being able to offset the interest paid on the mortgage and other things like not being able to offset 10% for wear and tear. It will be you can only offset actual repairs you have done instead. Lots of changes around BTL that are not being welcomed by landlords

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Worth mentioning to all you out there with BTL properties, make sure you are up to date on the new tax rules that are being introduced from next month. They include not being able to offset the interest paid on the mortgage and other things like not being able to offset 10% for wear and tear. It will be you can only offset actual repairs you have done instead. Lots of changes around BTL that are not being welcomed by landlords

 

The changes appear to have made it a lot more complicated to work out (although until we see the new self-assessment forms it's hard to say how much more difficult it will be in practice) but the new system really only affects UK higher rate tax payers as you get a basic rate offset to replace the actual finance charge. If you're under the tax threshold (unless you're only there because of the wear and tear allowance you're claiming and you're not actually spending anything on repairs) you can expect to remain there.


Chartered Accountant (England & Wales); Registered Tax Agent & Fellow of The Tax Institute (Australia)

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That makes lots of sense Ken. I saw on the tv they were saying it would have consequences on people in the uk that say earn in salary under the £50k bracket that allows them to claim child benefit but if these people have a BTL property they may be pushed just over that £50k and not be able to get the child benefit. Before, when they could offset mortgage interest and wear and tear etc they would still stay under the £50k threshold whereas now they look like in income they're over it on paper but it's not really their income (available to spend) as they pay much of it to the mortgage lender and can no longer offset it. I'm sure you could explain that far better than me but you get the gift of it I hope. Guess that won't effect most on here

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I thought if you lived outside of UK you didn't get a tax allowance. Basically the first penny you make is taxed at 20%?

 

I am about to move and will be renting out my home and this is the information I have been given.


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I thought if you lived outside of UK you didn't get a tax allowance. Basically the first penny you make is taxed at 20%?

 

I am about to move and will be renting out my home and this is the information I have been given.

 

No. If you're a British citizen (or of any EEA country - at least until after Brexit) you still get the Personal Allowance.


Chartered Accountant (England & Wales); Registered Tax Agent & Fellow of The Tax Institute (Australia)

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They include not being able to offset the interest paid on the mortgage and other things like not being able to offset 10% for wear and tear.

 

Good to know. I thought I read when I started renting it out 4 years ago you couldn't offset the interest anyway but I may have been mistaken. Also I didn't know about the 10% for wear and tear. Oh well, I can't lose what I didn't have. If that's correct on the interest then that's potentially quite a big change that could affect a lot of people that are also getting an additional UK income from somewhere else.

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https://www.gov.uk/check-if-you-need-a-tax-return

 

http://www.gmtax.com.au/do-you-need-to-lodge-a-uk-tax-return/

 

I'm late to this thread after a week away on holiday in NZ.

 

Hope the above links help.

 

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com and acollett@bdhtax.com

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I'm late to this thread after a week away on holiday in NZ.

 

 

Hasn't the internet got as far as NZ yet?


Chartered Accountant (England & Wales); Registered Tax Agent & Fellow of The Tax Institute (Australia)

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Hasn't the internet got as far as NZ yet?

 

On H-O-L-I-D-A-Y !


Partner Visa 309/100 Applied for - 23/6/15CO assigned (WP) 1/9/15Medical Completed 29/12/15Police Check uploaded 12/01/16GRANTED 21/01/16!!!!

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Hasn't the internet got as far as NZ yet?

 

Not where I was, Ken ... and hurrah for that!

 

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com and acollett@bdhtax.com

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oh thanks for posting this and all the replies, please can someone help as I'm now very confused? We are on 457 with rental property in UK. Our UK rental agent managing the property for us got us to sign a form so that we don't have to pay uk tax on our rental income, we declared our UK rental income on our Australia tax return last year.  Reading all the comments it looks like we might have missed out through the personal tax allowance. Can you please advise what we should do this year, or if there is a good tax advisor who knows about both UK and Australia tax that can help us?

 

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It is almost certain that your UK rental income should not have been included on your Australian tax return.

Suggest you explore amending your 2016 Aus tax returns.

 

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com and acollett@bdhtax.com

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