Buying a Flat to Rent Out

babyblade41

Old Troll alert 

macman

woahsoah said:

macman said:

OP, it's already been demonstrated to you in great detail that the best return you are likely to get will be around 4%. Furthermore, your £500pm gross rental will not all be paid to you. Since you live outside the UK, basic rate income tax will be deducted either by the tenant or agent and paid direct to HMRC under the Non-Resident Landlord Scheme. So that's 20% of your gross income gone already. Secondly, you say that eventually you will return to the UK and want to live in the property. Have you any idea how long this might take? Tenants in Scotland have more security of tenure than in England, and the minimum notice you'd need to give would be 84 days. If the tenant sits tight, then you have to evict them, which could easily take as long again (at present, all evictions are suspended in the UK for whatever cause).
Finally, where do you get the idea that you can only earn 0.25% in the bank? Plenty of fixed rate savings accounts pay 1%, National Savings Income Bonds pay 1.16%. But you'd be much better off just putting your £90K into the stock market using low-risk investments that should yield about 3%. £20K pa of this can be saved in an ISA wrapper, every year, so tax-free. The hassle that you would put yourself through to earn that extra 1% (maybe) is just not worth it. 

This is some really odd advice.

Filing a NRL1 (non resident landlord) form means you are paid gross. No tax is removed at source. As the rental income is so low and op appears to be a UK citizen they will have an unused UK personal allowance. Their rental income will be tax free. But may be assessed in their host country. Mine was not living in Hong Kong, so was mostly tax free in the UK (I went over the UK personal allowance)

Op is also not entitled to use ISAs as a non resident.

Did you perhaps not notice that this thread is now over 2 years old? The deduction of tax by tenant or agent is the default position unless an NRL1 is filed, which then results in the requirement to complete a self assessment form.
It was not at all clear whether the OP was resident in the UK or elsewhere for tax purposes, we simply knew that he had been working abroad and was in the UK 'for some months'. To quote. 'I'm living overseas or will be again'.So the info he supplied was vague in the extreme: we certainly didn't know what other income or assets he had here, and so you cannot assume that his rental income would be tax free.