Tax information

UK resident          (Expatriate Landlord below)

Rental Income
Rent derived from letting property is taxable. Even if you do not receive a Self Assessment Tax Return the responsibility is the landlord's to notify the Inland Revenue if you have a tax liability on letting income.

Record Keeping
Landlord's need to keep sufficient records to enable to accurately compute the letting profits for each year. This will include the rental statement provided by Timberlake Property together with all expenses incurred in the letting of your property.

These records should be kept for 5 years and Timberlake Property offer to store these records for their clients to assist in the case of an Inland Revenue audit.

Deductible Expenses
Many people make the wise decision to appoint a professional agent such as Timberlake Property and any agents fees are fully deductible in arriving at the taxable profit, as are accountancy costs incurred in connection with the preparation of annual accounts.

You may also deduct expenses in respect of water rates, repairs, maintenance, insurance etc. For property let furnished, you may claim an allowance for the wear and tear of furnishings. This is calculated by taking 10% of the rental income paid for the year. By choosing experienced tax accountants you will ensure that you receive the full benefit of all the available deductions.

Mortgage Interest
The interest on a loan used to purchase or improve the property can also be claimed as a deduction from the taxable property. There is no restriction on the amount borrowed. Any relief is effectively given at your top rate of tax.

Capital Gains Tax
If you sell a property that you have let, you will need to consider the implications of Capital Gains Tax if you make a profit on the sale - particularly if it was inherited or purchased as an investment. Exemptions are available in respect of properties that have been your principal private residence and those that have been both owner occupied and let and these can be very valuable, especially where property is held in joint names.

Timberlake Property can recommend specialist tax consultants to suit either overseas landlords or those resident within the UK. Keeping you fully abreast of changes in tax legislation and to help you organise your tax affairs in the most efficient way. Tax information.

Expatriate Landlord

Rental Income
Your status as non-resident provides no immunity from UK tax on rental income. Even if you do not receive a Self Assessment Tax Return the responsibility is the landlord's to notify the Inland Revenue if you have a tax liability on letting income.

Record Keeping
Landlord's need to keep sufficient records to enable to accurately compute the letting profits for each year. This will include the rental statement provided by Timberlake Property together with all expenses incurred in the letting of your property.

These records should be kept for 5 years and Timberlake Property offer to store these records for their clients to assist in the case of an Inland Revenue audit.

The Agent's responsibility
If as most expatriates do, you use the services of a letting agent, it is important to realise that the Non-Resident Landlord Scheme obliges the agents to deduct tax from all rents paid, after deduction of certain expenses.The agent will then account for this tax to the Revenue and furthermore submit annual Returns providing information about you, details of your property, the gross rent paid and the tax deducted.

If no agent is used, the same obligations will normally be passed to the tenant.

Approval to Receive Gross Rental Income
You can apply to the Inland Revenue to receive your rental income without tax having been deducted at source. To obtain this approval your tax affairs must be up-to-date, you must have a 'good tax history' and you must comply with the requirements of Self Assessment, including the filing of Tax Returns, if necessary and payment of any tax liabilities on time.

To obtain an exemption certificate overseas Landlords should apply to:

The Inland Revenue Financial Intermediaries & Claims Office (Non-Resident)
St Johns House,
Merton Road
Bootle,
Merseyside
L69 9BB

Tel: 0151 4726026

A copy of the completed and granted certificate will be automatically sent to your letting and management agent.

Deductible Expenses
Many people make the wise decision to appoint a professional agent such as Timberlake Property and any agents fees are fully deductible in arriving at the taxable profit, as are accountancy costs incurred in connection with the preparation of annual accounts. You may also deduct expenses in respect of water rates, repairs, maintenance, insurance etc.

For property let furnished, you may claim an allowance for the wear and tear of furnishings. This is calculated by taking 10% of the renal income paid for the year.

Mortgage Interest
The interest on a loan used to purchase or improve the property can also be claimed as a deduction from the taxable property. There is no restriction on the amount borrowed. Any relief is effectively given at your top rate of tax.

Allowances for Non-Residents
A wide-ranging number of individuals are entitled to full tax allowances but the Inland Revenue will not extend these to you automatically. It is for you to claim the relief and prove that you fall into the eligible categories. Also with independent taxation, any profits from jointly owned properties would be split equally between husband and wife - thus providing the possibility of further savings.

There are many tax planning opportunities for those with UK source income such as rents, pensions, etc. and professional assistance will prove invaluable.

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