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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4983
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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We are residents in the USA and have a property in the UK which

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We are residents in the USA and have a property in the UK which we rent out via a letting agency, we pay VAT on the amount and have filled in the Form registering us as non-resident landlords, required by HMRC, so we do not pay tax on the rental income in the UK, but declare all UK earnings (State Pension for me and the Rental Income) in the USA, so we pay tax on all of that in the US but not the UK....I get the impression that we should have been completing a self-assessment tax statement for HMRC but we have never done this, as the USA taxes us on our world-wide income. I understand that the dual tax agreement between the US and the UK results in perhaps further tax being deducted by the UK once the tax paid in the US is taken into account....so am unclear how we should proceed now
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

UK rental income is taxable in the UK. You should complete a self assessment and declare the profit from rental income on supplementary pages SA105 - UK property.
Any tax suffered on this income in the UK would be available for foreign tax credit relief against your USA tax under DTA between UK and USA.

By completing the form you have referred to, your agent pays your rental income gross before deduction of tax at source. You are supposed to declare this income on your tax return and pay any tax due under self assessment.

If you are a UK National, you would be entitled to your personal allowance against this income as if you were resident in the UK.

Information on how is entitled to UK personal allowance can be found here

https://www.gov.uk/government/consultations/restricting-non-residents-entitlement-to-the-uk-personal-allowance/restricting-non-residents-entitlement-to-the-uk-personal-allowance



More information on how rental income is taxed can be found here

https://www.gov.uk/tax-uk-income-live-abroad/rent

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.

Our UK income between the two of us (both non-resident) is less than 20,000 pounds per annum. Can we claim the tax allowance for non-resident UK nationals in this case to offset against rental and pension income.

Expert:  taxadvisor.uk replied 2 years ago.
David, thank you for your reply.

Yes you can claim personal allowance being UK Nationals as if you were resident in the UK.

I hope this helps.
Customer: replied 2 years ago.

Many thanks...will we get into trouble if these self-assessment forms were not completed in prior years, even if it looks as if no UK tax is payable? when did this rule come into operation as we were repeatedly told in 2010 that we did not need to fill in a tax return

Expert:  taxadvisor.uk replied 2 years ago.
David, thank you for your reply.

This rule is not new.

Have your circumstances changed since you were told in 2010 that you need not fill in a tax return?

I would file a tax return for 2014-15, due no late than 31 Oct 2015 if paper filing or 31 Jan 2016 if filing inline.

You could argue that you have not filed tax returns for past years as you were told not to file a tax return in 2010.

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.