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Old 02.10.2011, 22:00
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Please help! Tax/ Property NIGHTMARE

We (family) are moving to Montreux, Vaud in January '12 to take up residency in CH and to start new jobs.
We currently own (mortgaged) a house in the UK which we intend to rent out, we don't intend to make much money on the rental.
What are the income tax implications for having property in the UK when we are living over there? Someone told us that we would pay income tax in CH at whatever rate, and then we would also have to pay the UK tax rate, less the percentage CH tax rate (eg 40% less x % CH tax rate) meaning that we would have to still pay A LOT of tax Is this true?
I have been reading lots of other threads but am still confused as other articles say that we would be 'non-resident in the UK' that we wouldn't be in this situation...
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Old 02.10.2011, 22:35
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Re: Please help! Tax/ Property NIGHTMARE

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We (family) are moving to Montreux, Vaud in January '12 to take up residency in CH and to start new jobs.
We currently own (mortgaged) a house in the UK which we intend to rent out, we don't intend to make much money on the rental.
What are the income tax implications for having property in the UK when we are living over there? Someone told us that we would pay income tax in CH at whatever rate, and then we would also have to pay the UK tax rate, less the percentage CH tax rate (eg 40% less x % CH tax rate) meaning that we would have to still pay A LOT of tax Is this true?
I have been reading lots of other threads but am still confused as other articles say that we would be 'non-resident in the UK' that we wouldn't be in this situation...
Depending on if the revenue accept you have really left the UK or not.

If they think you are just away and ord resident in the UK you will be liable to UK tax on your world wide income.

If they accept you have left permanently & settled in CH, you will be liable to UK tax on any UK income only, you will get a personal allowance. The average tax rate will be less than 40%, of course how much depends on the rental income.

You will also be liable to tax in CH & will be credited for any tax paid in the UK. If you earn less than 120K you wont get a tax return so ...........
I doubt there will be much CH tax if any to pay, however there is a wealth tax on your world wide assets.
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Old 02.10.2011, 23:13
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Re: Please help! Tax/ Property NIGHTMARE

I believe that with the tax treaties between CH and UK you will not per say pay tax twice for the same rental income. But in CH the value of the house will be added to your asset base (and any mortgage to your liability side), such that ultimately it will aggregate towards your taxable assets here in CH.
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Old 02.10.2011, 23:15
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Re: Please help! Tax/ Property NIGHTMARE

The basic rules are: if you don't live in the UK for a whole tax year, then you are not liable for UK tax during that year. There is a concession that if you intend to remain outside the UK, then you can become immediately non-resident on your departure.

The complicated bits are determining whether you are living in the UK (ordinarily resident). Owning a house can mean that you are, but you'd have to be living in it substantially. Too much time in the UK can also affect this.

I know many people who left the UK to come here, and rented their houses out. They're all non-resident in the UK. The income from the rents is taxed in the UK, and that's deducted from the CH tax bill. The wealth tax isn't onerous.

It's all quite simple and straightforward - no nightmare at all.
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Old 02.10.2011, 23:16
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Re: Please help! Tax/ Property NIGHTMARE

Ask colleagues to recommend a good 'fiduciaire' to help with your tax return. We have a flat in the UK and as we are now resident in CH, it has to be declared here- eg its value -mortgage + rentals.
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Old 02.10.2011, 23:33
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Re: Please help! Tax/ Property NIGHTMARE

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I know many people who left the UK to come here, and rented their houses out. They're all non-resident in the UK.
UK tax is self assessment, they may think they are non resident now however it does not mean that they are. If they ever return to the UK the revenue may well investigate to see if they really 'left' for a settled purpose or not. Having ties to the UK is dangerous as it suggests your move was not permanent.

The law may change at the next budget to become much clearer, however it's not retrospective.
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Old 03.10.2011, 11:40
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Re: Please help! Tax/ Property NIGHTMARE

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UK tax is self assessment, they may think they are non resident now however it does not mean that they are. If they ever return to the UK the revenue may well investigate to see if they really 'left' for a settled purpose or not. Having ties to the UK is dangerous as it suggests your move was not permanent.
I don't think this is the case

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You'll be treated as non-resident from the day after you leave the UK if you can show:

•you left the UK to go abroad permanently or your absence and full-time work abroad lasts at least the whole tax year
•your visits to the UK are less than 183 days in a tax year and average less than 91 days a tax year over a maximum of four consecutive years
If you left the UK in May, intending it to be permanent, then a change of circumstances brought you back in December, if you couldn't show that the move was intended to be permanent, then you'd be liable for uk tax assessment on earnings May-December. (So having a house , fully furnished with no intention to let, would be suicidal). Renting a house out as an income stream is not in and of itself a worry.


If you left the UK in May 2012, intending it to be permanent, then a change of circumstances brought you back in December 2014, then you'd have been away for a full tax year. Intentions wouldn't come into it.
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Old 03.10.2011, 15:33
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Re: Please help! Tax/ Property NIGHTMARE

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If you left the UK in May 2012, intending it to be permanent, then a change of circumstances brought you back in December 2014, then you'd have been away for a full tax year. Intentions wouldn't come into it.
It all depends on how many links you severed, being away for 30 years was not enough for Robert Gains-Copper.
Retaining your house is a fairly clear indicator that you intend to return.
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Old 03.10.2011, 17:34
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Re: Please help! Tax/ Property NIGHTMARE

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It all depends on how many links you severed, being away for 30 years was not enough for Robert Gains-Copper.
Retaining your house is a fairly clear indicator that you intend to return.
Or an indication that you cannot sell it due to the current market conditions.
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Old 03.10.2011, 18:04
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Re: Please help! Tax/ Property NIGHTMARE

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It all depends on how many links you severed, being away for 30 years was not enough for Robert Gains-Copper.
Retaining your house is a fairly clear indicator that you intend to return.
Intent to return is irrelevant if you've been non-resident for the tax year.
Intent to return is only relevant to gain the partial tax-year concession.

The question moves to whether you're resident or not. Nothing to do with intent to return.

Gains-Cooper was deemed to never have left the UK, because he spent so much time in the UK, kept a home (which he didn't rent out) in the UK and carried out work in the UK. As a result, IIRC, they decided that his day of arrival and departure were not to be excluded from the 91 days, making him firmly resident during the tax year. These criteria are highly unlikely to apply to the average British expat, moving here, with family, to take up employment.

If you retain house ownership, with intent to use that as an investment vehicle, and/or for rental income, that isn't an intent to return.
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Old 03.10.2011, 18:18
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Re: Please help! Tax/ Property NIGHTMARE

Normally the situation is very simple:

In the UK, money earned from the house is taxed in the UK. If you rent it, you are earning UK money on UK assets. File a UK tax return on the UK earnings.

In CH, your country of residence, you are taxed on global earnings.
You include all UK earnings from UK assets (bank accounts, rental income etc)
You also include all liabilities (mortgage costs) as well as house maintenance. These reduce your tax liability.

To properly declare the UK and CH incomes in CH, you can take one of 2 approaches:

1. Pay tax in UK, and then declare UK after-tax income in CH. Pay tax in CH on the global income. Do nothing further. End result: You effectively end up paying a higher tax rate on the UK earnings.

2. Pay tax in the UK, declare UK pre-tax income in CH, and pay tax in CH on the global income. Utilise the existing UK-CH double-tax agreement to claim back the tax paid in the UK. End result: you pay tax once, at the CH rate.

In both scenarios, you benefit from claiming house maintenance (as a flat fee, or actuals, whichever is better for you) as well as mortgage costs (interest) on your CH tax return.

You must provide supporting documentation to back up all statements made in the tax return, ie some document showing house value, earnings from the house, maintenance costs, etc.

And remember, CH tax rates are generally lower than in the UK, so you will be better off....
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Old 03.10.2011, 18:25
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Re: Please help! Tax/ Property NIGHTMARE

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Intent to return is irrelevant if you've been non-resident for the tax year.
Intent to return is only relevant to gain the partial tax-year concession.

The question moves to whether you're resident or not. Nothing to do with intent to return.

Gains-Cooper was deemed to never have left the UK, because he spent so much time in the UK, kept a home (which he didn't rent out) in the UK and carried out work in the UK. As a result, IIRC, they decided that his day of arrival and departure were not to be excluded from the 91 days, making him firmly resident during the tax year. These criteria are highly unlikely to apply to the average British expat, moving here, with family, to take up employment.

If you retain house ownership, with intent to use that as an investment vehicle, and/or for rental income, that isn't an intent to return.
Gains Cooper's house was rented to Bank of America for 4 years, he had no access to the house. At the time it was illegal for him to take his money out of the UK due to Exchange controls. The Bank of England accepted that he had left the UK at the time.

If you don't break all links to the UK you run the risk of being Ordinarily Resident in the UK whilst working abroad. It's a real risk, clearly your happy to take it.
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Old 03.10.2011, 18:34
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Re: Please help! Tax/ Property NIGHTMARE

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If they accept you have left permanently & settled in CH, you will be liable to UK tax on any UK income only, you will get a personal allowance.
Actually no, NO personal allowance for non-residents. You pay tax on the rental income in the UK from 1.

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If you don't break all links to the UK you run the risk of being Ordinarily Resident in the UK whilst working abroad. It's a real risk, clearly your happy to take it.
No. Nothing to do with renting out a property or not. Just your pattern of residence.
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Old 03.10.2011, 18:36
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Re: Please help! Tax/ Property NIGHTMARE

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Actually no, NO personal allowance for non-residents. You pay tax on the rental income in the UK from 1.
not true. you get them if you are an EU national.
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Old 03.10.2011, 18:38
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Re: Please help! Tax/ Property NIGHTMARE

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Actually no, NO personal allowance for non-residents. You pay tax on the rental income in the UK from 1.

This can't be true. I've been here almost 9 years with property rented out in the UK and have always had a personal allowance.
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Old 03.10.2011, 18:40
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Re: Please help! Tax/ Property NIGHTMARE

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This can't be true. I've been here almost 9 years with property rented out in the UK and have always had a personal allowance.
It was true 20 years ago however EU passport holders are entitled to it,
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Old 03.10.2011, 18:42
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Re: Please help! Tax/ Property NIGHTMARE

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It was true 20 years ago however EU passport holders are entitled to it,
I don't have an EU passport (but wish I did...)
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Old 03.10.2011, 18:44
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Re: Please help! Tax/ Property NIGHTMARE

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No. Nothing to do with renting out a property or not. Just your pattern of residence.
It's about your relationship with the UK, you have to be able to prove you have left for settled purposes, nothing to do with 'pattern of residence' you cant be resident at all.

I was advised 17 years ago by ma lawyer to sell my flat, sell any UK investments & close any interest bearing accounts. He said it was the only way to show you really intended to leave for ever, rather than working abroad for a couple of years with the intention of returning.
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Old 03.10.2011, 18:45
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Re: Please help! Tax/ Property NIGHTMARE

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I don't have an EU passport (but wish I did...)
Then you cant get a UK personal allowance for any UK income!
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Old 03.10.2011, 18:46
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Re: Please help! Tax/ Property NIGHTMARE

sauce (sic)

http://www.hmrc.gov.uk/cnr/allow_nonres.htm
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