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Old 24.02.2012, 15:42
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UK tax when not a UK resident

Hi all,

I suspect I am similar to some here, where I rent out my UK property to cover part of the mortgage that might be outstanding. Even I am resident in CH, with a Swiss salary and tax.

However, it appears I will still be liable for UK tax and a UK tax return, as this rental counts as income.

My question: if I am effectively self-employed in the UK, can I count my mortgage as an 'expense', and use this in my return? I'd like to do this, as it will mean my UK income is effectively 'negative' (mortgage: £1,000, income: £700), so I should have no tax to pay.
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Old 24.02.2012, 15:53
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Re: UK tax when not a UK resident

You can claim the interest of your mortgage but not the principle. You can also claim any upkeep, management fees, certificate fees etc.

At least that is what my brother told me when he rented his house in the UK, but was still based in a different part of the UK.
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Old 24.02.2012, 17:04
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Re: UK tax when not a UK resident

If you earn an income from letting your house then of course it is taxable. There are very detailed guidelines on the HMRC website about this - just do a search at hmrc.gov.uk

You need to complete a self-assessment tax return every year, and if you have not submitted a non-resident landlord form to HMRC to request permission to receive the monthly rental payments gross of tax, then your tenants or managing agent should really be deducting basic rate tax and paying it to HMRC on your behalf.

In addition to the deductions already mentioned, you will also be entitled to the usual tax-free allowance (make sure you tick the correct box on the S-A form to claim this), and by the sounds of it this will more than cover any profit you make from the rental so if this is your only UK income you probably won't owe anything.
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Old 24.02.2012, 17:10
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Re: UK tax when not a UK resident

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You can claim the interest of your mortgage but not the principle. You can also claim any upkeep, management fees, certificate fees etc.

At least that is what my brother told me when he rented his house in the UK, but was still based in a different part of the UK.
That's handy if true - my interest would still exceed my income.
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Old 24.02.2012, 17:23
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Re: UK tax when not a UK resident

Don't forget you will have to enter the property's value on your Swiss tax return and pay wealth tax on it .
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Old 24.02.2012, 17:29
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Re: UK tax when not a UK resident

You can offset things like expenses that you've spent on the property for repairs renovation etc...

Do you have a letting agent? As an overseas landlord they should stop the tax at source and then you claim it back at tne end of the year, a real pain.

There is however, a form you can download and fill in which gets round this, so you just fill out an end of year tax return instead. A quick search on google will find the application form.
:-)
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Old 24.02.2012, 17:31
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Re: UK tax when not a UK resident

Income from property is treated separately from "earned income" from self employment. The mortgage interest could only be treated as an expense for the self employment if the property (or part of it) is used for the business rather than as living space.
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Old 24.02.2012, 18:02
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Re: UK tax when not a UK resident

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However, it appears I will still be liable for UK tax and a UK tax return, as this rental counts as income.
As a non-UK resident you still get a tax free amount, so you may not have any tax to pay. You will still have to complete the UK tax forms and join the non-residents landlord scheme or the agency you rent through may try to deduct tax from your rent.
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Old 24.02.2012, 18:07
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Re: UK tax when not a UK resident

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As a non-UK resident you still get a tax free amount, so you may not have any tax to pay. You will still have to complete the UK tax forms and join the non-residents landlord scheme or the agency you rent through may try to deduct tax from your rent.
Yeah, that's all done - Just got to declare the interest as the expense come tax form time, and I won't be paying any tax at all, thankfully.
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Old 24.02.2012, 18:11
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Re: UK tax when not a UK resident

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Income from property is treated separately from "earned income" from self employment. The mortgage interest could only be treated as an expense for the self employment if the property (or part of it) is used for the business rather than as living space.
If the property itself was the business, does that still count? My living space is in Switzerland afterall.
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Old 24.02.2012, 18:22
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Re: UK tax when not a UK resident

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Don't forget you will have to enter the property's value on your Swiss tax return and pay wealth tax on it .
We thought we could get away without doing that, but our accountant explained clearly that the risks were too great.
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Old 24.02.2012, 18:58
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Re: UK tax when not a UK resident

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Don't forget you will have to enter the property's value on your Swiss tax return and pay wealth tax on it .
Was not aware of this.
I'm on withholding tax.... what should I do?
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Old 24.02.2012, 19:01
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Re: UK tax when not a UK resident

If you own property abroad, or any savings, they have to be included into your 'wealth' and pay tax on it, currently here 0.7% per annum.
Ask friends or colleagues to recommend an accountant to make sure you are OK>
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Old 24.02.2012, 19:06
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Re: UK tax when not a UK resident

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Was not aware of this.
I'm on withholding tax.... what should I do?
If you mean that you are taxed at source, then until they send you a Swiss tax declaration then you don't have to declare it.

I was on tax at source and and also asked to complete the tax declaration. I had to pay the difference over what I had already paid at source.
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Old 24.02.2012, 19:34
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Re: UK tax when not a UK resident

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If you mean that you are taxed at source, then until they send you a Swiss tax declaration then you don't have to declare it.

I was on tax at source and and also asked to complete the tax declaration. I had to pay the difference over what I had already paid at source.
not strictly true. you are required to make a declaration under certain circumstances even if you are not asked for one.
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Old 24.02.2012, 19:37
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Re: UK tax when not a UK resident

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If the property itself was the business, does that still count? My living space is in Switzerland afterall.
Yes it does. You can definitely deduct the interest, as well as the letting agency fees, an allowance for wear and tear if the property is furnished or specific amounts spent (not both), a few other things. It's all itemised in the relevant section of the self-assessment form. Download a form template and all the notes - it's a laborious read but very clear.
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Old 24.02.2012, 19:38
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Re: UK tax when not a UK resident

You are taxed at source on your salary. If you have any kind of 'wealth', eg savings or property, including abroad, you have to declare them separately.
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Old 24.02.2012, 22:51
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Re: UK tax when not a UK resident

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If you own property abroad, or any savings, they have to be included into your 'wealth' and pay tax on it, currently here 0.7% per annum.
Ask friends or colleagues to recommend an accountant to make sure you are OK>
0.7% is huge, pretty sure the percentage increases with wealth, in your case I think you mean 0.07%
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Old 26.02.2012, 03:23
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Re: UK tax when not a UK resident

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Hi all,

I suspect I am similar to some here, where I rent out my UK property to cover part of the mortgage that might be outstanding. Even I am resident in CH, with a Swiss salary and tax.

However, it appears I will still be liable for UK tax and a UK tax return, as this rental counts as income.

My question: if I am effectively self-employed in the UK, can I count my mortgage as an 'expense', and use this in my return? I'd like to do this, as it will mean my UK income is effectively 'negative' (mortgage: £1,000, income: £700), so I should have no tax to pay.
The good thing: if you're making a net loss on your UK property, this can reduce your Swiss tax as it puts you in a lower tax bracket. However, for this purposes only interest payments will be deductible, not all mortgage payments (i.e. including capital repayments). This does not reduce your taxable income in Switzerland, but they tax you at a lower effective rate (i.e. the rate based on your income if you were able to set off those costs against Swiss income, I think.)

From your UK perspective, renting out a property is considered to be a property business, so if you have losses from that business, they can only be set off against profits from property business in future years.

This benefit is not bad if you're expecting to make good income from the property in future years when living in the UK - otherwise, relatively useless given the first 6K+ of UK income is within the personal allowance each year.
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Old 26.02.2012, 10:02
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Re: UK tax when not a UK resident

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The good thing: if you're making a net loss on your UK property, this can reduce your Swiss tax as it puts you in a lower tax bracket. However, for this purposes only interest payments will be deductible, not all mortgage payments (i.e. including capital repayments). This does not reduce your taxable income in Switzerland, but they tax you at a lower effective rate (i.e. the rate based on your income if you were able to set off those costs against Swiss income, I think.)
The Swiss system does not use brackets in the conventional way, your percentage of tax payable increases with every extra 1000 CHF you earn IIRC.
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