rental income tax for non resident landlords

tomaszjureczko

Hi all,

I'm helping Polish investors to buy a BTL in England. They've asked me about paying tax from their rental income. So I googled it, read a lot on HMRC website, but it is still not clear for me. Please help me to understand.

How I understand it is that non resident landlord can apply for "approval to receive rental income with no tax deducted"

1. If Polish landlord doesn't apply for the approval, a lettings agent will calculate the tax on 20% rate and pay the tax to HMRC.

2. If non resident landlord gets the approval and informs lettings agent about it then he will get gross rental income paid by the agent. But what's next? Is the landlord then obligated to complete a Self-Assesment Tax Return? Will he get £10000 tax free Personal Allowance then? There is a "Convention between the UK and Poland for the avoidance of double taxation". Does it change anything?

Thx in advance for any help. Cheers.

booksurr

yes a non resident LL who lives in Poland is (currently) entitled to the UK personal allowance but is required to file a tax return in the UK as explained on the NRL scheme to which you refer.
http://www.hmrc.gov.uk/manuals/rdrmmanual/rdrm10340.htm

they claim it via an R43
https://www.gov.uk/government/publications/income-tax-claim-to-personal-allowances-and-tax-repayment-by-an-individual-not-resident-in-the-uk-r43

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/367669/r43-notes-2014.pdf

as for the details of the tax treaty - go read them yourself
http://www.hmrc.gov.uk/taxtreaties/in-force/p.htm

The entitlement to a personal allowance is an area which will (rightly) change "soon" to harmonise with the way other EU countries treat us:
https://www.gov.uk/government/consultations/restricting-non-residents-entitlement-to-the-uk-personal-allowance/restricting-non-residents-entitlement-to-the-uk-personal-allowance

tomaszjureczko

Big thanks booksurr. All is clear now. Of course after I've spent some time reading links you've provided.

Spidernick

Also bear in mind that non-tax residents will be liable to UK Capital Gains tax on this type of property from 6 April 2015.