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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4972
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I have recently returned to uk after many years working overseas.

Resolved Question:

I have recently returned to uk after many years working overseas. I invested in a few (3) rental properties in uk in last 3 years and need to arrange to pay tax on this income. Approx. 12,000ukp per year after fees and expenses. I am currently living off of this income. I am not working and am claiming no benefits of any kind. I am living in my mothers home. There is a chance that I may spread my time living between the uk and Taiwan evenly.
What are my tax allowances and deductions against property income. What is minimum and maximum (if any) time spent in uk to minimize tax exposure.?
Many thanks
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

Please advise what ties you have with the UK
- Do you have a family here
- How much time are you likely to spend in the UK
- What is your Nationality

Many thanks
Customer: replied 2 years ago.

I am a British national who last worked in Uk in the 1980's. My mother is only family I have in uk. The time I spend in UK each year can be flexible from 100% to 50% of my time while unemployed depending on tax advantages or liabilities.. If I secure employment in Asia again I will be away 100% of time.

Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your prompt reply.

Your question is -
What are my tax allowances and deductions against property income. What is minimum and maximum (if any) time spent in uk to minimize tax exposure.?

As a UK National you will be entitled to full personal allowance as any other taxpayer. The personal allowance for current tax year (6 Apr 2014-5 Apr 2015) is £10,000.

You can claim the following expenses against rental income (this list is not exhaustive)
letting agents' fees
accountancy fees
insurance (building and contents)
interest on loan
maintenance and repairs (not capital improvements)
utility bills, ground rent and service charges if any
council tax
cleaning and gardening services etc. etc

Now we come to the question of residency...
There is a guidance note issued by HMRC that deals with Statutory Residency Test. The link to it is here
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/366839
/rdr3_1_.pdf


Basically,
- if you were to stay in the UK for 183 days or more during the tax year;
- have a home in the UK home for a period of at least 90 days, and a person must live in that home for at least 30 days during the tax year.
- carry a full time work in the UK ..

you will be deemed automatically resident in the UK.

I suggets you read the section deling with Sufficient UK ties Test to fully understand how HMRC would determine whether you are UK resident or not in a tax year.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

Forgive my ignorance but you stated;

Basically,
- if you were to stay in the UK for 183 days or more during the tax year;
- have a home in the UK home for a period of at least 90 days, and a person must live in that home for at least 30 days during the tax year.
- carry a full time work in the UK ..

Do I need to comply to all of these or only one of them?

If as I assume it is all; What tax on property income do I pay if I reside less than the 183 days per year?

Thanks.

I appreciate your prompt and concise responses.

Expert:  taxadvisor.uk replied 2 years ago.

Thank you for your reply.

You need to comply with all three to be deemed automatically resident in the UK for tax purposes...

If you do not fall into either of the categories i.e. automatic UK residence and automatic non-UK residence tests your status will depend on the number of 'sufficient ties' that you have with the UK in combination with the number of days you are in the UK. The combination differs according to whether you are an ‘arriver’ or a ‘leaver’ under the provisions of the SRT.

Whether you are a resident or non-resident for tax purposes, property income attracts UK income tax at basic rate of 20% unless your total income from UK sources after personal allowance is above £31,865.

Higher rate tax at 40% applies to taxable income £31,866 - £150,000

I hope this is helpful.

taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.

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