Ask the Experts: does my rental income get taxed in the UK?

Q. I live in the UAE and have done for three years. I’m in the process of buying a property in the UK, which I plan to rent out. Do I need to pay tax on this income in the UK as it’s earned there, even though I don’t live there?

HMRC_3429640bA. Adam Thompson, tax manager, The Fry Group 

Any individual who derives income from UK property is subject to UK taxation on that income whether they are resident in the UK or not.

The amount that is potentially liable to a charge to tax is the profit generated during the UK tax year.

However, if you have no other UK source income, and are entitled to a UK personal allowance (by virtue of being a UK citizen), then only the profit in excess of your personal allowance will be subject to UK income tax.

One further complication for non-residents with UK rental property is that the tenant/letting agent must deduct basic rate tax at 20 per cent from any gross rents due to you.

You can apply to HM Revenue and Customs for exemption from this by completing HMRC Form NRL1i. HMRC will normally agree to this where you have a good track record with regards to your UK tax affairs.

You should also seek local advice in the UAE as to whether you have any reporting obligations or liability to tax there on the UK rental income.


Source: The Telegraph

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