Tax on rent from U.K. home

[Snowball2]

Due to some unforeseen circumstances, I’m not able to sell my UK home so I’ll be renting it instead. 

I think I’ll need to submit a self assessment firm to HMRC. House is in joint names so the income won’t exceed the personal threshold (if this can be combined). I’m not sure what I need to do in Oz though. I know the rental income is simply counted as income so is taxed at the same rate as wages etc. I’ve also heard about a depreciation report and offsetting certain things. This is what I’m not sure of. I wasn’t expecting to be renting it out so I’m unsure of certain aspects. 

Any advice would be really helpful  

Edited August 20, 2019 by Snowball2
Typo

[MARYROSE02]

If you have income from both countries then you will have to submit a return in both countries but you won't be taxed twice. You may still pay some tax in both countries though. I do a self-assessment to HMRC because I have rental income and pension from the UK. I think the rental income from the UK is paid free of a particular kind of tax. Sorry to be vague. I'm sure I submitted a form to HMRC. Previously I claimed it back when I did my self assessment return.

[SPRINTER]

Might be a good idea to get some professional help, there are some forms that need to be lodged for a landlord living overseas. Alan Collett who is on here regular is pretty clued up on these matters. As with most dealings with HMRC once the system is set up correctly it is pretty straight forward.

Good luck with getting a decent tenant.

[Marisawright]

I second the suggestion to get professional help.   I wonder if @Ken is still around?   You need to be sure you're claiming all the expenses you can, but also that you don't claim expenses you shouldn't.  It can all get complicated, especially when you eventually sell and have to do a whole heap of calculations.  If you use the same tax agent through the whole time you rent out, then the agent will be able to do that for you, and that will save a lot of headaches.

[Snowball2]

Thanks, yes I think professional advice is definitely needed. 

[Alan Collett]

On 21/08/2019 at 01:35, Snowball2 said:

Due to some unforeseen circumstances, I’m not able to sell my UK home so I’ll be renting it instead. 

I think I’ll need to submit a self assessment firm to HMRC. House is in joint names so the income won’t exceed the personal threshold (if this can be combined). I’m not sure what I need to do in Oz though. I know the rental income is simply counted as income so is taxed at the same rate as wages etc. I’ve also heard about a depreciation report and offsetting certain things. This is what I’m not sure of. I wasn’t expecting to be renting it out so I’m unsure of certain aspects. 

Any advice would be really helpful  

What is your visa status in Australia please?

Best regards.

[Snowball2]

Hi Alan. I have a PR visa  

[Alan Collett]

Then you will need to include the net rental income on your Australian tax return.

Please feel able to contact me directly if you think you will need some help preparing and lodging your 2019 tax return, and would like a freebie chat.

Best regards.

[Snowball2]

Thanks Alan. I can’t message on here yet but will email you next week.

[Larns and Dave]

I've been living in Australia now just shy of four years and still own and rent a property in the UK. I've been paying tax at source in the UK. The first couple of years here I only worked part of the year so ended up with reasonable tax rebates in each country. Last year I got clobbered for tax here on the uk income and anticipate the same with my up coming Aus tax return. 

My question is, now that I'm working full time here, am I better off not paying tax in the uk and just covering it all in my Australian tax return. At the moment I'm paying two accountants and still getting a large tax bill. 

What is the advantage of paying tax at source in the uk (if any)?

Many thanks, Dave

[Alan Collett]

Just now, Larns and Dave said:

I've been living in Australia now just shy of four years and still own and rent a property in the UK. I've been paying tax at source in the UK. The first couple of years here I only worked part of the year so ended up with reasonable tax rebates in each country. Last year I got clobbered for tax here on the uk income and anticipate the same with my up coming Aus tax return. 

My question is, now that I'm working full time here, am I better off not paying tax in the uk and just covering it all in my Australian tax return. At the moment I'm paying two accountants and still getting a large tax bill. 

What is the advantage of paying tax at source in the uk (if any)?

Many thanks, Dave

Hi Dave.

What is your visa status in Australia?

Best regards.

[Larns and Dave]

THanks Alan. I have PR, indefinite leave to remain until next year. I must press on with citizenship. My wife and daughter are both citizens. 

Many thanks. Dave

[Alan Collett]

OK - then your UK rental income is taxable in Australia.

Any tax you pay in the UK is creditable against your Australian tax liability - known as a Foreign Income Tax Offset.

However, if your UK source income is less than your UK personal allowance there should be no tax to pay in the UK.

Consider whether a tax depreciation report in respect of your UK property is a worthwhile expense.

Feel able to ping me a private message (click on my name to the left of this post) if you'd like to have a freebie chat - we do both UK and Australian tax returns at bdh Tax (I'm a UK and Aus qualified tax accountant).

Best regards.

[Marisawright]

You don’t get to choose which country you pay tax in. Ot all comes down to the regulations in both countries. The only sensible approach is to use a tax agent who understands both tax systems because they know how they mesh together (or don’t!). Such agents are like hens teeth. Alan is one.

[Larns and Dave]

I can opt to be non resident for tax purposes in the uk and therefore not pay tax there but deal with it all here. I have sent Alan a pm

[Marisawright]

22 minutes ago, Larns and Dave said:

I can opt to be non resident for tax purposes in the uk and therefore not pay tax there but deal with it all here. I have sent Alan a pm

I’m not aware that you can “opt”. There are clear rules that determine whether you are legally resident for tax purposes in both the UK and Australia. Alan will sort you out

[Fisher1]

I have paid all my income tax here in Oz from the day I arrived and have paid no UK tax since that time, even though all my income arises from pensions in the UK.

I had completed our UK tax returns for years, so I felt reasonably confident of my ability to file the first UK form after we arrived in Australia ... misplaced confidence.

Whatever you do, don’t contact the UK tax office for advice! I did, and followed their incorrect advice. They then fined me for doing what they had told me to do. It’s a measure of the frustration and/ or worry the whole business caused me that I just paid the fine instead of fighting it. 
 

Alan Collet saved the day. Saved us a substantial amount of money too.