Tax on rental income if property owned by a shell company in tax haven

John_Pierpoint

kickwhamstunner wrote: »

Why mention this? It's not remotely relevant to the question.

The original question was raising the possibility that an African family (presumably large and probably unemployed) was able to claim 2K a week in rental costs and was the profit on this public money being "correctly" taxed?

I think it is possible that lack of judgement by those spending tax payers money could result in a conspiracy to put such families in high rent properties and spirit the profits overseas.

Tax on UK rental income

UK tax is due on your income from rental property.
If you're non-resident and you get rent from UK property paid directly to you, your tenant must deduct UK tax at the basic rate - currently 20 per cent. If you use a letting agent, they'll deduct the tax from the 'net rent' -after any allowable expenses they've paid.
You can apply to have the rent paid to you without tax deducted if you don't think you'll have to pay any UK tax, or if your tax affairs are up to date. But you'll still need to declare the rent on a Self Assessment tax return if HMRC sends you one.
If the country you live in has a double taxation agreement with the UK you may be able to get relief there for UK tax paid.


http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/LeavingOrComingIntoTheUK/DG_078445

Housebear51

What will happen to all these African families after next April when LHA gets capped at 400per wk?

Some of these African families have several children and yes they do get thousands per week to pay their rent. They will have to move to cheaper areas?

Will there be amass exedus out of London or will rents fall? I think a bit of both.

Housebear51

Housebear51 wrote: »

Simple tax question about the rent on this house talked about in the press. The government are paying 2grand a week to an African family so they can live in this expensive house. The media are trying to track down the owner of thwe house. Whoever the owner is, if the rent goes to the owner who is out of the country, does he still pay tax on the income?

Quote from that Dmail story

"The revelation that a foreign national, with unspecified tax status, is benefiting from taxpayer-funded rent payments will heighten concern about Britain’s broken benefit system.
The Mail on Sunday tracked down Dr Roman Keckeis, a lawyer acting for Brophy.
Dr Keckeis, who lives in a £5million mansion over the border in Austria and who drives a £120,000 Maserati sports car, is known as Dr Fixit and regarded as one of the shrewdest lawyers in Liechtenstein.
He declined to talk in detail about the house or reveal the identities of anyone connected with the Brophy group.
He said: ‘We manage assets and our clients expect confidentiality. I can confirm the house was bought as an asset. More than that I cannot say.’
Liechtenstein, in an Alpine valley between Switzerland and Austria, prides itself on its secrecy. It is estimated to hold £150billion of the world’s assets in its banks and 5,000 Britons are thought to have deposited more than £3billion in the principality simply to avoid paying tax."
http://www.dailymail.co.uk/news/article-1295601/Somali-refugee-given-2-1million-taxpayer-funded-house-owed-7-000-rent-previous-home.htmll

Does any one know the answer to this question?

"if the rent goes to the owner who is out of the country, does he still pay tax on the income?"

John_Pierpoint

The tax should be deducted before the rent is paid.
How well HMRC police this law, is anyone's guess.