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bigduckontax
bigduckontax, Accountant
Category: Tax
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I am full time employed in the UK - with a salary and bonus

Customer Question

I am full time employed in the UK - with a salary and bonus combined of approx £150k per annum. But - I live with my wife in Germany and visit the UK for < 10 days each year.
I spend about 100 days per year at home in Germany, and the rest on trips around EU and worldwide.
At the moment I pay PAYE tax and complete a tax return at the end of each year - paying regular income tax.
I also have 3 properties in the UK which are all rented - but unfortunately I make a loss each year and therefore have no tax to pay.
Is there any more efficient way to manage my tax situation?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
On the face of it you are non resident in the UK and thus not liable for UK taxation save on the rental income from your lettings upon which you make a loss. If you are non resident you can spend up to 91 days in the UK in any one tax year and still retain that status.
German Tax rates are about 0 - 16.7K euro, nil; 16.7K - 105.6K geometrically progressive up to 42% and over 42% up to some 501K euro. You now need to sit down with a wet towel round your head and the backs of lots of envelopes to work out if you would be better off under German or UK taxation. In fact though the personal Income Tax Rate in Germany averaged 50.32% from 1995 until 2014. You are probably better off under the UK tax regime.
Here is advice from the Small Business and Tax Blog from which you will see that you cannot offset your rental losses against other income, only carry them forward:
'No general right to immediate tax relief
First of all, there is no automatic, general right to offset the loss against other income, such as from a job or a business. This is what would be most likely to generate an immediate tax rebate. We don’t know why this should be the case, as this option does exist for other losses such as self-employment losses, but that is what the tax law says.
If a person usually makes a profit from their rental property each year, and they are in employment, the tax on this profit may be collected each year through their PAYE tax code. In the year in which there is no profit there will probably be a refund of the over-deducted tax, but this is not the same as getting tax relief on the rental loss' [which is carried forward - my note].
Whichever way you turn you meet Benjamin Franklin's dictum that in life there are but two certainties, death and taxes and you must be taxed somewhere! Remember under the Double Taxation Convention between the UK and Germany the same income steam cannot be taxed in both jurisdictions. This is achieved by means of tax credits, the tax deducted in one country being allowed as a credit against any liability in the other. The Convention does not, however, protect you from differences in tax rates.
I do hope that I have been able to shed some light on your position even if the result is rather negative.
bigduckontax and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Thanks for the info - it's what I thought but always worth to ask an expert...

So - it's time to file for 14/15 and pay up again ;)....

Expert:  bigduckontax replied 2 years ago.
Yes, try a good grovel, pressure of work etc!
Thank you for your support.

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