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Old 13.04.2009, 15:44
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Taxed on rental income for house in UK

Hi,

I'm in the process on transferring out to Zurich and am intending on renting my house in the UK

I'm wondering if i would need to pay tax on this income either in the UK or Switzerland as I've heard that I may not have to if i'm no longer going to be a UK resident.

anyone got any expirence in this?

thanks.
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Old 13.04.2009, 17:37
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Re: Taxed on rental income for house in UK

Take a look at http://www.hmrc.gov.uk/cnr/nr_landlords.htm.

Basically, you fill out a (UK) form to apply to receive your UK rent income tax free (on the assumption that your "usual place of abode" is not the UK) and send this off to HMRC.

They reply, giving approval, and a reference number. You give this reference number to the letting agent, and they pay you the rent tax free.

Then, when you do your Swiss tax return one of the things you have to declare is the rent income received, and any costs incurred (letting agent fees, anything else you've had to pay out in that year). This is used as part of the calculation to figure out your Swiss tax liability.
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Old 13.04.2009, 18:32
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Re: Taxed on rental income for house in UK

Alternatively if you have a UK tax reference you can use your UK tax-free allowance against net rental income (less expenses and agent's commission etc) and declare the income in the UK and not Switzerland.

Then you will need to declare the capital value, less mortgage, on your Swiss tax form (last page) for wealth tax. This is a modest tax and if you ever sell in the UK and bring the capital to Switzerland you will be asked where the capital came from and have to pay retrospectively.

The above is what i did for the first 5 years here...
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Old 13.04.2009, 19:38
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Re: Taxed on rental income for house in UK

I used to rent out a house in the UK and what worked well for me was to have a short term mortgage so that my monthly repayments were high and I made a small loss each month. Therefore nothing to pay tax on! I'd recommend you get professional advice before going down the same route.

I was fortunate to sell at the right time in terms of property value and exchange rate and made a tidy sum in capital appreciation. Definitely worth doing if you fo with the economic cycle buy low sell high.
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Old 13.04.2009, 21:10
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Re: Taxed on rental income for house in UK

Swiss residents must declare all global assets and all global incomes. If any incomes are also taxed elsewhere, then depending on the DTA (Double Taxation Agreement) between Switzerland and that country, the Swiss would exempt. But you must declare and the Swiss tax officer decides possible deductions and exemptions.
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Old 13.04.2009, 21:57
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Re: Taxed on rental income for house in UK

You should also register with the Non-Resident Landlord Scheme to have rent paid by your tenants/agency without tax deducted.

I would also recommend not using an agency for rent collections. Too many friends have had the agency pay them months late, leaving them needing to transfer money back and chase the agency. I prefer direct debits from the tenant's bank account.

Also, if you don't hold a UK passport, selling while non-resident and living abroad for 7 years means no capital gains tax is due.
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