renting out a property

mcwhirter

hi. i currently rent out a property in England but live and work in france. the yearly rent is quite low and a lot less than the uk personal allowance so i would not need to pay uk tax as i dont have any other UK income.
do i still have to do a uk tax return even though i would never have to pay tax on the small income?

OscarFoxtrot

Yes - It's a self assessment issue.


If you don't register (and get the right permission) your tenant can/must simply deduct 20% from their rent

mcwhirter

what happens if the tax return isnt lodged?

OscarFoxtrot

mcwhirter wrote: »

what happens if the tax return isnt lodged?

You would get prosecuted for tax evasion?


You would also receive 20% less rent?


- not sure what the issue is. It's a few hours out of your day and wont cost you anything.

sheramber

As said if you do not get permission from HMRC to receive rents without deduction of tax then your agent/ tenant must deduct tax at basic rate form the rent and forward it to HMRC.

You then would have to apply to HMRC for a refund , if appropriate.

https://www.gov.uk/tax-uk-income-live-abroad/rent

mcwhirter

thanks for the info. can you be prosecuted for tax evasion if there was never any tax to pay as in my first post?

Dazed_and_confused

Well as you don't seem to want to comply with your responsibilities as a non resident landlord it is presumably a possibility.

How would HMRC know if there was any tax to pay or not if you haven't declared the rental income.

mcwhirter

im not trying to get away with not paying tax. i have always paid what is due since working but i just wanted to know if the rental income was less than the personal allowance then why does it have to be declared if it is very clear that no tax is due to be paid? is it not inefficient to have to do a return when tax is never going to have to be due?

Hasbeen

mcwhirter wrote: »

im not trying to get away with not paying tax. i have always paid what is due since working but i just wanted to know if the rental income was less than the personal allowance then why does it have to be declared if it is very clear that no tax is due to be paid? is it not inefficient to have to do a return when tax is never going to have to be due?

How do HMRC know that tax will not be due?

You fill in a self Assessment. As its not very clear to them, they do not know all your circumstance's.

Dazed_and_confused

im not trying to get away with not paying tax. i have always paid what is due since working but i just wanted to know if the rental income was less than the personal allowance then why does it have to be declared if it is very clear that no tax is due to be paid? is it not inefficient to have to do a return when tax is never going to have to be due?

It looks as though a tax return might not be necessary

https://www.gov.uk/tax-uk-income-live-abroad/rent

You need to declare your rental income in a Self Assessment tax return unless HMRC tells you not to.

Maybe try contacting HMRC and you may not need to file a return. Surely better to do that than have the possibility of HMRC asking awkward questions further down the line?

00ec25

you are required to notify HMRC that you have rental income
that applies whether it is less than your PA anyway


HMRC will then decide if they want you to do a tax return, or, as your have more realistically suggested yourself, they won't and will instead accept you simply declaring your income to them


that said, the key difference in your case is you are Non Resident and therefore unless you inform HMRC of your existence either your tenant or your agent are legally obliged to deduct 20% tax from the rent before they pay you, irrespective of whether you will end up paying tax anyway. That is the way the Non Resident Landlord scheme operates


also bear in mind, unless your tenant has been given an address in the UK at which they can contact you, there is no legal requirement at all for them to pay rent. You don't have to use an agent, but you must have a UK contact address, if the only way the tenant can contact you is by writing or phoning to France then your tenant does not have to pay you at all.


contact HMRC, get them to issue approval to receive rent without tax deducted and then get them to accept you do not need to do a tax return
But whatever you do, don't ignore it thinking you do not have to do anything.