Rental profit is liable to tax whether or not you live in the UK. Several items of expenditure can be offset against rental income of which the following list covers the main tax-deductible areas. If you require further information on this matter we would recommend that you seek the advice of a qualified accountant as tax status does vary.
- Loan or Mortgage interest
- Water Rates
- Building, contents and Legal Insurance premiums
- Agent charges (i.e. our management fee and letting fee) +vat on those charges
- Buildings, repairs, decorations and cleaning to the property
- Wear and Tear – This allowance is given for hard furnishings and fixtures where a property is let furnished. Further guidance on calculations can be obtained from accountants various other expenses directly relating to the letting.
Communication with the Inland Revenue and tax returns are the responsibility of the landlord and/or their accountant. We do not withhold tax for landlords resident in the UK.
The Inland Revenue’s Landlords Tax Guide is available by contacting your local Inland Revenue Office.
Overseas Landlord Taxation
With effect from 6 April 1996 under the Taxation of Income from Landlord (non-residents) Regulations 1995, the rent-receiving agent is required to deduct basic rate tax from the rent (after taking deductible expenses paid out into account) and to pay the tax to the revenue each quarter. If you decide NOT to have your property managed by Stuarts Property Services Ltd you should be aware that your tenant will be legally responsible for the collection and payment of tax to the Inland Revenue.
However, overseas landlords can apply to the revenue for exemption from this requirement providing their tax history is good and up to date. The overseas landlord will be issued with a certificate with a copy sent direct to Stuarts Property Services Ltd authorising us to pay rent without tax deductions.
We strongly advise that applications for exemption (known as NRL1 form) are submitted as soon as you are aware of your move overseas to ensure rent can be paid gross. You can submit the form NRL1 form online CLICK HERE
The Inland Revenue’s Landlords Tax Guide is available by contacting your local Inland Revenue office.
If you would like to speak to someone in person regarding this matter, please call the Inland Revenue’s Financial Intermediaries and Claims Office (FICO) on tel:+44 03000582413