Moving overseas - rental property, tax implications

TheJoneses

My partner and I are teachers. We live in the north and own a property in London that has been let out for the last 6 years and fully managed by a letting agent who does a great job.

We've both accepted job offers from a school in the Middle East and will be moving there this summer in time for the new academic year.

I was wondering if anyone knew what the tax situation would be regarding the rental income once we are no longer resident in England?


Any thoughts on the tax angle would be greatly appreciated.

Retired_Mortgage_Adviser

The basic principle is that non-residents are only liable to UK personal income-tax on income arising from a source in the UK. So that would include your rental income from the London property.

Luckily (assuming that you are British citizens), the tax free personal allowance is available to you even though you are non-resident. This means that, under normal circumstances, the share of your individual share of the rental income will have to exceed £12,500 in the UK before you are subject to UK income tax.

You will need to continue to submit a self assessment annually, this can't be done online so needs to be done manually or through an accountant. Your personal allowance needs to be claimed through a form (simple process).

There are a few other formalities (withholding tax from rent, etc or getting permission to not have to do so) which your letting agent will no doubt tell you about.

In the very unlikely event that your new country of residence operates a system of income tax, the worldwide income may/may not fall into its scope. If we're talking about UAE, Qatar,etc then it's not an issue.

If you get the opportunity (and the property is mortgaged), I would suggest considering taking out a long fix before you leave, there's never been a better time to get one. Expat BTL mortgages aren't hard to get but will be more expensive.

TheJoneses

Wow, that's the best thing I've heard in a long time! The same rental income but tax free! That should help us significantly overpay on the mortgage.

Retired_Mortgage_Adviser wrote: »

Luckily (assuming that you are British citizens), the tax free personal allowance is available to you even though you are non-resident. This means that, under normal circumstances, the share of your individual share of the rental income will have to exceed £12,500 in the UK before you are subject to UK income tax.

Andysandy

Mind you, every few years the government consults on whether entitlement to the UK Personal Allowance should be restricted to UK residents only so there's no guarantee that this will continue, or indeed for anything else in this world

TheJoneses wrote: »

Wow, that's the best thing I've heard in a long time! The same rental income but tax free! That should help us significantly overpay on the mortgage.