Moving abroad + house advice

firsttimeabroad

Hello, hoping someone can help us! Sorry in afvance for long post.

Will be moving abroad for first time - for at least two years. Given current property market husband and I want to hold onto our house for at least 12 months.

We will be registering as non UK residents for tax purposes and this is where we are a little worried. His brother is going to stay in the house to keep an eye on it - it is not an official rental - i.e. no paperwork/mortgage not changed as we will be paying full mortgage from overseas.

The question is - he wants to contribute a nominal fee each month to us - does this have to be classed as rental income on our forms? There is no gurantee how long he will stay and the amount he will contribute is well within our personal tax free allowances- should we declare it or look on it as a family gift each month?

We really don't want to cheat the system but we don't want to have to deal with mortgage changes when it may only be for a couple of months.

What do people reckon? If we declare as rental income for tax will mortgage company find out and thus force us to change our mortgage? (given we are on a ridculously high fixed rate I can't see it being intheir interests!)

Many thanks for those who read this far...

N79

Are you sure you will be non resident? If you are only away for 2 years you may well end up with two years split treatment. (You don't just become fully "non resident" on the day you leave the UK).

If you accept rent then you have a tenancy and will need to comply with all the relevent laws (deposit protection, gas safety etc). If you don't accept rent then its just your brother in law living in your house.

firsttimeabroad

thank you for the advice! Our intention is not to return to UK permanently as we do think we will work abroad for the rest of our careers and we are in the process of filling in relevant forms to become non residents so hopefully we will be able to get this sorted before we leave.

I think that we won't accept rent from brother in law as this seems to be the easiest way of solving the issue with the house! don't suppose you know- presumably if he sorts out bills for us this is ok?
Thank you again

housebuyer_abc

firsttimeabroad wrote: »

thank you for the advice! Our intention is not to return to UK permanently as we do think we will work abroad for the rest of our careers and we are in the process of filling in relevant forms to become non residents so hopefully we will be able to get this sorted before we leave.

I think that we won't accept rent from brother in law as this seems to be the easiest way of solving the issue with the house! don't suppose you know- presumably if he sorts out bills for us this is ok?
Thank you again

It's not that cut and dried...

Firstly your brother in law needs to be giving you no 'payment' for this for it not to be a rental - i.e. he can't offer to buy you both a flight to come over and see your parents (unless of course he does these sorts of kind gestures already) as this can be seen as 'rent'

Secondly - you will need to inform the mortgage company and insurance company that you won't be in it - but that it won't be empty - they will at a miniimum require paperwork from your brother-in-law stating that he waives any right as a tenant in the unlikely event that they have to repossess.

Your insurance would most definetly be invalid as normal residential properties are taken out in the name of the person who owns and resides in it - meaning you can't take it out - your brother in law can;t either as that can be seen to be forming a tenancy - so you'll need a different insurance policy and it will cost more.

Better all round if you obtain consent to let form the mortgage company, get landlord insurance for the buildings, get the required gas safety certs etc and then draw up a tenancy agreement. You can set the rent at whatever you want.

Only obligtaion then is to keep the paperwork up-todate and fill in a tax return once a year, if you are charging him little or nothing the interest on mortgage will ensure you have npo tax to pay (this doesn;t mean you get out of the self assessment form though - you still need to submit showing no tax due)

Britwife

I really sounds more like a rental to me. If he gives you any payment then you will have to be up front with it. Will be cheaper to be that way then find out later it was wrong and have more expenses because of it.

Will he be paying for bills in his own name or yours? Also, you need to inquire about your home insurance if you're not in it and your brother is. You want to make sure you're protected if something happens at the house.

jizadine

What happens if bills are kept in OP's name, the brother pay's OP and then OP pay the bills? Is this classed as rent?

Cheers
J

housebuyer_abc

jizadine wrote: »

What happens if bills are kept in OP's name, the brother pay's OP and then OP pay the bills? Is this classed as rent?

Cheers
J

It would definetly be seen to have formed a tenancy, which means that the insurers, mortgage provider and HMRC would need to be informed, it would probably also require the relevant legal certificates also.

Best all round to be totally above board (I know you were never trying to be anything other than straight) as the small amount of time form filling now is tiny compared to the hassle of sorting this out from another country.

Remember it only takes a neighbour to dislike your brother before they start making anonymous calls to HMRC and maybe even the bank if they can find out who holds your mortgage

pusscat

Have you had really good legal and financial advice on becoming non resident? It is not as simple as just filling in the forms.....

If you are relying on the "90 day rule" then HMRC do not just take this into account, they can also look at the rest of your "lifestyle" too. So if you have a house that is not formally let, that you could stay in when you are back in the UK then you are likely to fail the "non resident" test.

This is a really specialist area and you need proper advice - I am not saying you have not taken any, but I am just checking :-)

This article gives you a flavour....http://www.lowtax.net/lowtax/html/offon/uk/uktax.html


I was also under the impression that you could not hold a UK mortgage whenyou were not aUK tax resident, but it was some years ago I looked into it, so it may have changed since.

Please make sure you get really good advice - it is an area where people can get it horribly wrong.

Puss
xx

firsttimeabroad

thank you for all your advice- it is very much appreciated. Going to look into the various issues in more detail and make some decisions! Thanks again

<sebb>

Also have a read of this

http://www.hmrc.gov.uk/cnr/nr_landlords.htm

I would suggest having a chat with someone at the HMRC to check you dont fall foul of any of the tax laws.

Bermuda_John

firsttimeabroad ...........

You will need to be very careful about when you return to the UK. As you can probably tell by my name i did the same as you, left the UK............ for Bermuda.

I know a friend who left for just under 2 years, yet when he went back he had to pay the full tax becasue he hadnt left FOR ONE FULL TAX YEAR, if i remember rightly.

I think he came in July 05 and left 31 March 07 ......... he never saw out the full 05/06 or 06/07 tax years ..... the stupid idiot came back 5 days to early and got stung for his income on the whole time he was in Bermuda ...... which was a massive amount into the 40% band!!!!

With regards to the house, I rented mine out and filled in the tax return etc .... any rental income will be covered by your personal allowance so no worries about paying tax if you were to rent it.

Renting it to a family member for a nominal amount, is that renting it out???? ...... im an accountant (not a tax accountant) and im sure that can be argued either way ..... if you are not charging him the full market rate then it isnt really renting out, so surely it isnt rental income???

Im sure a tax accountant can help you out or even better the Inaland REvenue will tell you for free.

You would have to let the mortgage company know as you arent living in it, they would pronbably let you off (mine did) if it is temporary but make you sing a consent to lease or switch to buy to let if you indicate you are never coming back. I wouldnt say that you are never coming back..... if you have signed a contract let them know that is when you THINK you will come back.

Being nosey .......... are you going anywhere nice?