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Devonuk

Rental income from UK

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Has anyone still got rental property in the uk? Wanting to understand how the tax works on that. Do I pay tax for the income I receive from rental income to the UK or do I have to declare it in oz and pay tax for it in oz only?

thanks. Will be about £750/ month income from rental property. 


Australian citizen married to Brit. Been together 17 years, married for 10. Have 2 children. 

1 child Dual citizen and 1 child Dual citizenship currently going thru, applied last week for citizenship by descent. 

Aiming to move back to Australia August 2020 on 309/100 spousal visa.

In middle of completing application and gathering evidence.

Looking to submit March 2019. 

Very scared about the enormity of the whole process! So will require a lot of hand holding! 

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You have to submit a tax return in both countries and declare it on both


Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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So basically you pay tax twice?? 


Australian citizen married to Brit. Been together 17 years, married for 10. Have 2 children. 

1 child Dual citizen and 1 child Dual citizenship currently going thru, applied last week for citizenship by descent. 

Aiming to move back to Australia August 2020 on 309/100 spousal visa.

In middle of completing application and gathering evidence.

Looking to submit March 2019. 

Very scared about the enormity of the whole process! So will require a lot of hand holding! 

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10 hours ago, Devonuk said:

So basically you pay tax twice?? 

Don't know but I've asked Alan Collett to sort mine out. He's on this forum and is very helpful.

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16 hours ago, Devonuk said:

So basically you pay tax twice?? 

No, there is a double taxation agreement, but it is a bit complicated. Also if you do it yourself, you will probably miss out on claiming some tax deductions in Australia that you're entitled to.  I'd suggest hiring someone like Alan Collett to do the returns for you, it's a worthwhile investment.

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Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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You complete an NRL1 form which is an Non resident landlord form in the UK, which means you dont pay the tax there but you have to declare the rental income in your Australian Tax Return.  You can offset Mortgage interest, agents fees, maintenance costs(with receipts).  You are only taxed in Australia.

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On ‎22‎/‎01‎/‎2019 at 18:37, AJ said:

You complete an NRL1 form which is an Non resident landlord form in the UK, which means you dont pay the tax there but you have to declare the rental income in your Australian Tax Return.  You can offset Mortgage interest, agents fees, maintenance costs(with receipts).  You are only taxed in Australia.

An NRL1 form doesn't mean you don't pay tax in the UK, instead it exempts the person paying you the rent (normally your estate agent) from withholding tax and having to hand it over to HMRC. If your total net income is below the personal allowance then you won't pay any tax in the UK (and if you didn't complete the NRL1 form and your tenant or agent withheld tax you will receive a tax refund) but if even after deducting your allowable expenses such as Mortgage interest, agent fees and maintenance costs your total net income is more than the personal allowance (currently 11,850 pounds if I remember correctly) you will still have to pay tax in the UK.

Temporary Australian residents escape tax on their foreign income but if you are a permanent resident or a citizen you have to pay tax on the (net) rental income. Any tax you did have to pay in the UK will be an offset which reduces the amount of Australian tax you have to pay. Note that the net rental income for Australian tax may be less than for UK tax as there are depreciation allowances available in Australia (but you have to jump through some hoops including obtaining a depreciation report to get that).


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

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On ‎21‎/‎01‎/‎2019 at 20:08, Devonuk said:

So basically you pay tax twice?? 

No. But you may have to pay tax to two different tax agencies.

The rules of the double taxation agreement are (for a property in the UK) that the UK gets to tax you first and Australia second with the amount of tax you paid in the UK deducted from the amount of tax you have to pay in Australia. Effectively therefore you only have to pay the tax you would have had to pay in Australia.

Conveniently most individual landlords in this situation aren't earning enough in the UK to exceed the personal allowance and consequently the amount of tax paid in the UK is 0 and so the whole amount of tax gets paid in Australia only with no UK tax to offset.


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

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If you are a British citizen you will still have your UK tax free threshold.  You may not have to pay tax in the UK if the property rental income (minus expenses) is less than your UK tax free threshold.  Notwithstanding this you do need to submit a self assessment tax return containing the high level P&L details (you can do this on a 'cash basis').  If you've not registered for self assessment tax in the UK i'd hop to it quickly as you will be required to declare the income even if you do not pay tax on it.

You will have to declare the Income in Australia and the chance are you will end up paying a little tax on it, so be prepared for this.

Depending on the age of the property and recency of any major building work done to it, you may be able to get a depreciation report done, which can be treated as an expense in your P&L.  All of this is relevant to the Australian tax return though (provided you're not obligated to pay tax in the UK due to being above the threshold)

Edited by Aussiepom

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Thank you everyone for your replies, it’s been hugely helpful! The income split between my husband and I will be below the threshold for the uk allowance, so will not pay tax on it in the uk. Yeah! Sucks that I still need to pay tax on it tho in oz but you can’t have it all your way I suppose. 


Australian citizen married to Brit. Been together 17 years, married for 10. Have 2 children. 

1 child Dual citizen and 1 child Dual citizenship currently going thru, applied last week for citizenship by descent. 

Aiming to move back to Australia August 2020 on 309/100 spousal visa.

In middle of completing application and gathering evidence.

Looking to submit March 2019. 

Very scared about the enormity of the whole process! So will require a lot of hand holding! 

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I've just gone online to submit a UK self assessment which I have done for the last four years or so. This time I have noticed that there is a section at the start that requires you to declare if you are a tax resident in the UK or Scotland and non UK residents cannot use the online assessment and have to use a 3rd party or submit a paper return. I'm not sure if Ive been missing this up to now or it changed recently. I've never hid from HMR&C that we live and work here in any past correspondence etc.

I've created a return (using Taxfiler) and now it appears I have lost my personal allowance and will be charge 20% on my half of the rental income in the UK. I've emailed them to clarify this for me but as time is ticking and I've left it to the last minute I was wondering if anyone has heard of the PA being removed for non UK residents? I'd heard ages back HMR&C wanted to abolish it for people like myself but hadn't heard it come into effect.

Thanks for any information.

 

Edit: I just saw a line I'd missed in the return which was "Claiming personal allowances under terms of DTA?" Selected this and it took my PA into account and zero to pay, well in the UK at least.

 

Edited by Plentymech

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Call HMRC.  They're really good +44 161 931 9070

They will be able to help you with this one.

 

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35 minutes ago, Plentymech said:

I've just gone online to submit a UK self assessment which I have done for the last four years or so. This time I have noticed that there is a section at the start that requires you to declare if you are a tax resident in the UK or Scotland and non UK residents cannot use the online assessment and have to use a 3rd party or submit a paper return. I'm not sure if Ive been missing this up to now or it changed recently.

I think it's always been like that. I've always had to do a paper return.


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

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Does this apply if all your income including rental income comes from UK, but you live in Australia on a long term temporary retirement visa, or does it come into effect if/when you have PR. Also if and when we get PR our income still comes from UK. We lodge self assessment on line as far as I know. Will confirm facts with husband. Thanks.

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13 hours ago, ramot said:

Does this apply if all your income including rental income comes from UK, but you live in Australia on a long term temporary retirement visa, or does it come into effect if/when you have PR. Also if and when we get PR our income still comes from UK. We lodge self assessment on line as far as I know. Will confirm facts with husband. Thanks.

https://www.ato.gov.au/Individuals/International-tax-for-individuals/In-detail/Foreign-income-of-Australian-residents/Foreign-income-exemption-for-temporary-residents---introduction/

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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14 hours ago, Plentymech said:

<snip>

 

Edit: I just saw a line I'd missed in the return which was "Claiming personal allowances under terms of DTA?" Selected this and it took my PA into account and zero to pay, well in the UK at least.

 

 

As a UK citizen you should be ticking box 16, not box 15.

See the notes to supplement SA109: https://www.gov.uk/government/publications/self-assessment-residence-remittance-basis-etc-sa109

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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14 hours ago, Aussiepom said:

Call HMRC.  They're really good +44 161 931 9070

They will be able to help you with this one.

 

As a rule I don't recommend reliance on unaccountable Government persons, as good as they may be on the telephone.

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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16 hours ago, Plentymech said:

I've just gone online to submit a UK self assessment which I have done for the last four years or so. This time I have noticed that there is a section at the start that requires you to declare if you are a tax resident in the UK or Scotland and non UK residents cannot use the online assessment and have to use a 3rd party or submit a paper return.

That's been the case for at least three years, it's annoying.


Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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An old thread but just thought i'd mention there are some apps out there these days for Self Assessment including SA109.  Untied is one example.

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2 hours ago, mt9754 said:

An old thread but just thought i'd mention there are some apps out there these days for Self Assessment including SA109.  Untied is one example.

Just had a look at that. Can't get my head around their pricing model. You've a choice between monthly and annual for a product you only need to use one day a year? Surely everyone would cancel after the first month?


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

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10 hours ago, Ken said:

Just had a look at that. Can't get my head around their pricing model. You've a choice between monthly and annual for a product you only need to use one day a year? Surely everyone would cancel after the first month?

Yeh I found it weird too.  Out of politeness I went for 1 year (there is 20% discount code).  

Having used it for a bit now, as long as you’re subscribed then items in your connected bank accounts will be automatically categorised and added to a draft return for next year.  Useful to ease the pain especially with buy-to-let income and expenses.  But I agree, potentially not a big enough reason to stay subscribed for most.

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https://taxfiler.co.uk/solutions/individuals-self-employed/individual-personal-tax-return/

Taxfiler would be my go to UK tax return application of choice.

If you aren't minded to pay a tax professional!

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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Hi all. Adding another related question to this:

I’m a Uk citizen on a 482 temporary skills shortage visa in Aus. I rent a property in the UK, income from which is within the personal tax allowance so I didn’t pay any tax on it last year. As a temporary resident I didn’t declare the income on my ATO return. 
 

I have just applied for PR through employee sponsored PMSOL occupation. PMSOL applications are processing much quicker than other visas and for this I realise how lucky we are to be in this situation. However with the tax in mind, if my PR is finalised before 1st July am I correct in thinking the entire of last years rent would be liable for Aus tax? But if my PR comes through after 1st July it won’t (until next year’s tax return)? Thanks. 

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13 hours ago, GeeBee said:

Hi all. Adding another related question to this:

I’m a Uk citizen on a 482 temporary skills shortage visa in Aus. I rent a property in the UK, income from which is within the personal tax allowance so I didn’t pay any tax on it last year. As a temporary resident I didn’t declare the income on my ATO return. 
 

I have just applied for PR through employee sponsored PMSOL occupation. PMSOL applications are processing much quicker than other visas and for this I realise how lucky we are to be in this situation. However with the tax in mind, if my PR is finalised before 1st July am I correct in thinking the entire of last years rent would be liable for Aus tax? But if my PR comes through after 1st July it won’t (until next year’s tax return)? Thanks. 

Hi GeeBee.

In short: disclosable on your Aus tax return as target foreign income until your PR visa is granted.   Included as taxable income from the day your PR visa is granted.

Hope this helps!


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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23 hours ago, GeeBee said:

Hi all. Adding another related question to this:

I’m a Uk citizen on a 482 temporary skills shortage visa in Aus. I rent a property in the UK, income from which is within the personal tax allowance so I didn’t pay any tax on it last year. As a temporary resident I didn’t declare the income on my ATO return. 
 

I have just applied for PR through employee sponsored PMSOL occupation. PMSOL applications are processing much quicker than other visas and for this I realise how lucky we are to be in this situation. However with the tax in mind, if my PR is finalised before 1st July am I correct in thinking the entire of last years rent would be liable for Aus tax? But if my PR comes through after 1st July it won’t (until next year’s tax return)? Thanks. 

I’m pretty sure you’re breaking the law not declaring it now, but get some professional advice 


Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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