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Old 25.06.2018, 09:50
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Investment in London, UK property?

Hi

I have inherited a property in the UK and was wondering how income tax will work on letting it out. I will get something like £1500 a month from the property and was wondering how this will be taxed? I have been looking at this salary calculator to try work it out but still not sure. I've noticed others asking tax-y questions here so I've joined hoping for an answer. Thanks!
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Old 25.06.2018, 11:21
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Re: Investment in London, UK property?

To my understanding (I don't own a property):

You need to pay wealth tax on your international wealth (so for your property, the equity you own in it minus any debt).

For rent, you need to declare it as income and will be taxed as normal, as you are from your salary.

I don't know if there needs to be any tax paid in the UK or if it's only Switzerland.. I'll let someone else go into that
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Old 25.06.2018, 11:49
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Re: Investment in London, UK property?

You can deduct maintenance cost for that and also interest payments on the mortgage.
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Old 25.06.2018, 12:09
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Re: Investment in London, UK property?

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You can deduct maintenance cost for that and also interest payments on the mortgage.
It's unlikely an inherited UK property would come with a Mortgage, if it is subsequently mortgaged not all the interest is deductible for a higher rate tax payer as Rent is now added to income first & this will make many lower rate tax payers into higher rate tax payers. There is also a UK personal allowance of £11500, so on a rent of £18,000 the tax is likely to be under £1300 if no other UK income.
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Old 25.06.2018, 13:24
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Re: Investment in London, UK property?

I just sold the last of my properties in London recently, which were rented out so I do have first hand experience of this:

I assume you're a Swiss taxpayer and renting the property in a private capacity?

Your rent will be subject to a UK withholding tax which will be retained by either the rental agency or the tenant and handed over to the taxman. However you can apply to HMRC to have this payed gross. If they agree you can show this letter and receive the rent gross.

It is not guaranteed you will receive the personal allowance as you're not UK resident, you will have to negotiate that as well.

You will then pay tax at 20% after all deductions (including a personal allowance if granted) for maintenance, agency fees, advertising etc.

You will also have to register online as a UK taxpayer.

You will not be taxed on this income by the Swiss as they do not regard foreign real estate income as this is now taxed in the country where the real estate is located.

If you do rent then i would use an agency (I did) who will take a commission but make sure to add insurance in case the tenant defaults. They will also hold the deposit for you as that needs to be held in a special segregated account.

Finally, calculate the real return, including voids and maintenance, and see if you're not better off selling the property and investing the money in a portfolio of shares or even in Swiss property instead.
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Old 25.06.2018, 16:04
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Re: Investment in London, UK property?

As LuganoPirate mentioned in former post, you will not be taxed on this UK income by the Swiss authorities but you need to mention it in your tax declaration and they take it for the tax rate.
It is right that foreign real estate income is taxed in the country where the real estate is located.


In all cases your UK income (rental income) and your UK wealth (property) is part of your Switzerland tax declaration.
The amounts of UK income and amounts of UK wealth will increase the tax rate which will then be applied on your Switzerland income and wealth.
UK rental income and UK wealth amounts are not be taxed.
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Old 25.06.2018, 18:39
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Re: Investment in London, UK property?

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It is not guaranteed you will receive the personal allowance as you're not UK resident, you will have to negotiate that as well.
Currently your legally entitled to it, there was talk of ending it for non residents however it never got passed into the finance act. Edit
U.K. taxation is self assessment there is nothing to negotiate.

Last edited by fatmanfilms; 25.06.2018 at 18:50.
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Old 25.06.2018, 23:59
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Re: Investment in London, UK property?

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Currently your legally entitled to it, there was talk of ending it for non residents however it never got passed into the finance act. Edit
U.K. taxation is self assessment there is nothing to negotiate.
You are only entitled to the allowance if you're resident in the EU or EEA. Switzerland is in neither. It can also be allowed if it's been agreed in the DTT between two countries. HMRC denied me the allowance but after some discussions between us they agreed I could have the allowance.
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Old 26.06.2018, 00:30
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Re: Investment in London, UK property?

If it's any help, I had a 30min meeting with a solicitor to complete tax forms in the UK, which were met with a 'not appropriate' resonse from HMRC. I phoned HMRC and their staff (whilst being a miserable bunch), were actually very helpful.

Turned out that renting out a property that was your primary UK home before moving abroad, is taxed differently to renting out a buy to let investment property. As you've inherited this property, and if you don't own anything else in the UK, you might be able to convince them that it would be your primary residence if you return to the UK. It's definitely worth giving them a call, but don't expect patience or good manners when you do.
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Old 26.06.2018, 07:49
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Re: Investment in London, UK property?

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You are only entitled to the allowance if you're resident in the EU or EEA. Switzerland is in neither. It can also be allowed if it's been agreed in the DTT between two countries. HMRC denied me the allowance but after some discussions between us they agreed I could have the allowance.
The requirement is to be a citizen of the UK or an EEA country. There are also other possibilities. See here:

https://www.gov.uk/tax-uk-income-liv...onal-allowance

Due to generous personal allowances, UK property can be a very tax efficient investment vehicle for the person with the right profile, it can give you very low taxed marginal income.
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Old 26.06.2018, 11:11
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Re: Investment in London, UK property?

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You are only entitled to the allowance if you're resident in the EU or EEA. Switzerland is in neither. It can also be allowed if it's been agreed in the DTT between two countries. HMRC denied me the allowance but after some discussions between us they agreed I could have the allowance.
Incorrect, it's to do with citizenship not residence as HMRC website states.
https://www.gov.uk/tax-uk-income-liv...onal-allowance
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Old 26.06.2018, 17:45
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Re: Investment in London, UK property?

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Incorrect, it's to do with citizenship not residence as HMRC website states.
https://www.gov.uk/tax-uk-income-liv...onal-allowance
Yes, i was assuming the OP was Swiss. Despite being dual national I still had to fight for the allowance. Maybe the taxman was not aware of the rules???
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Old 26.06.2018, 18:37
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Re: Investment in London, UK property?

Always a game of cat and mouse.
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Old 26.06.2018, 19:25
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Re: Investment in London, UK property?

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Yes, i was assuming the OP was Swiss. Despite being dual national I still had to fight for the allowance. Maybe the taxman was not aware of the rules???
As it's self assessment it's unto you to calculate what you owe & claim your allowance.
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