Working in N. Ireland and letting flat in Scotland - Tax

Mr.James_2

Hi. Apologies if this has been asked before but I can't find an answer to my query.
I own a flat in Glasgow and have recently accepted a job offer in Belfast. I'll be letting out the flat and I'm completely in the dark about how the income from renting the flat will be taxed between the two countries. Northern Ireland's tax system is in line with England & Wales and has a substantially higher threshold for the higher tax bracket than Scotland.
I would assume that I would use the NI, E & W tax system as that's where I work and live but I know the taxman isn't as nice as that.
Thanks in advance,
J

Dazed_and_C0nfused

Wales has its own system now as well 

Where will you be resident for the longest period in 2019:20? 

Where do you expect to be resident for the longest period in 2020:21?

Mr.James_2

Does it? Didn't know that.
Scotland will be my main residence for 19/20 tax year (I'll be paying all my tax here for this year) but after that, it will be N.I. going forward. 
Paying tax on the rental income in Scotland at the starter rate (less deductions) with no Personal Allowance and then paying my income tax & NIC as normal in northern Ireland would make sense to me but I'm no tax expert. Surely this is a pretty common situation?!
J

oldbikebloke

read:
https://www.gov.uk/scottish-income-tax/if-you-live-in-more-than-one-home

by definition, the flat cannot be your main residence if it is let to tenants.It really is that simple.

then read:
https://www.gov.uk/scottish-income-tax/if-you-move-to-or-from-scotland

Dazed_and_C0nfused

Mr.James_2 said:

Does it? Didn't know that.
Scotland will be my main residence for 19/20 tax year (I'll be paying all my tax here for this year) but after that, it will be N.I. going forward. 
Paying tax on the rental income in Scotland at the starter rate (less deductions) with no Personal Allowance and then paying my income tax & NIC as normal in northern Ireland would make sense to me but I'm no tax expert. Surely this is a pretty common situation?!
J

You will pay tax at Scottish rates for 2019:20 on all your income except savings interest and dividends where rest of UK rates apply

You will pay rest of UK rates for 2020:21 on all your income.  Unless you return to be Scottish resident early enough in the year.

You cannot pay Scottish rates on wages and rest of the UK rates on rental income or vice versa in one tax year.

dissstressed

oldbikebloke said:

read:
https : // www. gov.uk/scottish-income-tax/if-you-live-in-more-than-one-home

by definition, the flat cannot be your main residence if it is let to tenants.It really is that simple.

then read:
https : //www .gov.uk/scottish-income-tax/if-you-move-to-or-from-scotland

GM, is that you?

Mr.James_2

You will pay tax at Scottish rates for 2019:20 on all your income except savings interest and dividends where rest of UK rates apply. 
You will pay rest of UK rates for 2020:21 on all your income.  Unless you return to be Scottish resident early enough in the year.
You cannot pay Scottish rates on wages and rest of the UK rates on rental income or vice versa in one tax year.

That's brilliant. I didn't think it would work that way because you enter the higher bracket in Scotland almost £7,000 earlier than the rest of the UK (this would have been the case for me). I would have thought the Scottish government would want that extra taxable revenue.

So is a calculation of owed tax from a rental property simply calculating rental income (less allowable expenses) against the basic tax rate (in N.I. I won't enter the higher rate with combined income)?
Excuse my ignorance this is my first time renting a property out (accidental landlord) and I'm from the Republic so I'm not clued up on the ins & outs of the tax system here. I tried reading up on it but I'm still a bit confused.


Cheers,
J 

Dazed_and_C0nfused

No, you cannot claim finance costs such as mortgage loan interest an expense any more* although you can claim a fixed tax credit instead which might have the same outcome overall.

But one consequence of this is that your rental income profit for tax purposes is greater than it would be so you might end up in the higher rate tax bracket.

Suggest you look at the 2018:19 version of the income from property page of the Self Assessment return and accompanying notes on gov.uk to get a better understanding.

*this is being phased in over a 5 year period.
Year 1 = old rules
Year 2 = 75% can be claimed as an expense, 25% eligible for a tax credit
Year 3 = 50/50
Year 4 = 25% expense, 75% tax credit

Year 5 = new rules

Mr.James_2

I didn't know there were notes accompanying the Self Assessment return. I'll have a look at them. Thanks.

Retired_Mortgage_Adviser

Can you not do the Self Assessment online? That takes out the need to make any judgements and there's plenty of help while filling the form to ensure that you get ithe rental income stuff right.

oldbikebloke

since you are unfamiliar with how the UK works, please do a LOT of background reading. Every year the links off this page are updated for the relevant tax return and so are the accompanying NOTES
https://www.gov.uk/self-assessment-forms-and-helpsheets

for rental property income and tax on profit start here:
https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income
you will need to master this one in detail :
https://www.gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies

there are lots of other things you need to know (or employ an accountant who already does know it)
if you want to keep it simple, claim this:  https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4410
alternatively, if you want to minimise your tax. learn all of this:
https://www.gov.uk/hmrc-internal-manuals/property-income-manual