Self assessment for overseas rental income?

follow_the_sun1992

Hello,

I am an EU national permanently living and working in the UK for the last 4 years. Back in my home country, I own a studio flat which I am renting out for around 100 pounds per month, though this can vary depending on the current exchange rate. This money stays deposited in my current account at my home country, which I am using for any repairs at the property, for paying the arising taxes and using the rest when visiting my home country in order to avoid buying currency.

I have been filling the tax returns at my home country every year and paying the tax on this income in the same way I have done before coming into the UK.

However, I recently read that I may need to fill in a self assessment for this income, even though it gets taxed in the country of its origin. Is that true? The accountant, who filled in my tax return at my home country, always told me that I only needed to declare it there and not in the UK.

Please help me here, because I am a bit panicked after reading some FAQs on the HMRC website about undeclared overseas income and the associated penalties and the last thing I need is to have to pay thousands of pounds for just a few hundred pounds that I did not declare.

Do you think I should consult an accountant or contact HMRC?

If I start filling in the tax assessment for the 2013-2014 tax year, is there a way for HMRC to find out about the rental income of the previous years?

Thanks in advance.

BlondBoy

Potentially really complex area of tax law, this. But, on the face of what you're saying, you're fine.

You've chosen to declare your UK income here and pay tax on it here. You're declaring the non-UK income at your home country, paying tax on it there and - importantly - keeping it there.

It gets more complex if you bring the income from your home country to the UK - and that's when you may need to mention it on a UK return and pay tax on it. But you seem OK for now. Plus, in the broader scheme of things, it's a very small amount - HMRC are looking for tens of thousands, rather than £1,200 pa.

JasonPr

Since you're overseas earnings are below 2000 pounds (you don't have other foreign income, right?) and you're not bringing the money to the UK, you're fine.

See http://www.hmrc.gov.uk/international/remittance.htm

Apart from this exception, foreign earnings have to be declared since residents are taxed on worldwide earnings.

follow_the_sun1992

Thank you for your replies, this is a great relief!

No, I have never had any other foreign income, i.e. pension, dividends, apart from this rental income. The rent used to be a bit higher, around £130 up until 2012, but this is still below the £2,000 limit per year.

Finally, as said before, I am not bringing any of that money into the UK and spend it exclusively at my home country.

So my understanding is that I can use this £2,000 allowance, as long as I am a UK resident but not domiciled in the UK, though proving the latter sounds quite tricky!