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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I wonder if could help me. I have lived and worked in

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Hi,I wonder if could help me. I have lived and worked in UK since April 2011. I'm employed full-time and taxes are taken care of my employer. In that period, my income in UK has been below £43000 and so I qualified for basic rate.In July 2010 my dad gave me his flat in Poland and then he died in February 2011. Since May 2012 I have been renting it which earned me the following:
- 2012: £1200
- 2013: £2650
- 2014: £1925
- 2015: £2837So far, I was paying tax for it in Poland only at a standard rate of 8.5%. Although I am the sole owner of the flat I have a legal obligation to pay off my brother from whatever our father has given to me 10 years before his death (that includes the flat). Therefore, all the above income was going to pay him off as required by the law.Recently, I have been told that I should have been paying taxes in UK as well.My questions are as follows:- do I need to pay anything to HMRC and if so how much
- if I don't have to pay do I need to declare that income anyway
- if I need to declare it, how do I do it if all my taxes are handled by my employer
- if I have to declare it only and not pay anything how do I do it now? Will I get any fines? How much?
- if I have to declare it and pay something how do I do it now? Will I get any fines? How much?Thanks
Submitted: 11 months ago.
Category: Tax
Expert:  bigduckontax replied 11 months ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. You are liable to UK Income Tax at your marginal rate of tax for the rentals received. What you are paying to your brother is irrelevant. You must declare the net rental on your Self Assessment Tax Return and advise your tax office of the historic data and ask them to amend previous declarations. The 8.5% tax you paid to the Polish Authorities is, under the Double Taxation Convention between Poland and the UK, allowed as a tax credit against any UK liability. The Convention only permits tax to be imposed in one jurisdiction, but it dos not protect you from differences in rates of taxation. You should make your peace with HMRC as soon as possible and throw yourself on their mercy. Unfortunately mercy is in short supply in that Department. You will have to pay interest on unpaid taxes, only fair, after all HMRC pay interest on over paid tax, and if you come clean they may, and I only say may, waive penalties. Fines can rack up extremely quickly and you could be looking at at least 1.5K per tax year. I am so sorry to have to rain on your parade.
Customer: replied 11 months ago.
Ok, thanks for that. It just seemed perfectly logical and fair to me that I need to pay tax in the country where the source of income is (job or flat in this respect).I still don't understand how I normally would declare my rental income if all my tax returns is normally done by my employer. Does it have to be added by my employer to my tax return or do I have to fill out some separate form? Would I then have to declare my UK income again on that separate sheet? Even though it's already been done by my employer? That seems awfully complicated :-(. If I'm doing it retrospectively, will I have to dig out the info on my UK income or can I just give them the missing rental income?Also, in terms of Polish tax as my tax credit, will I need to pay 20% on all income + any potential fines to HMRC and then wait for them to send me my money back (amounting to the tax I paid in Poland) or will I be able to deduct it from the amount due straight away?Last thing, what I have found while looking online is Let Property Campaign. Can I do it through that and how does it make my situation any better?
Expert:  bigduckontax replied 11 months ago.
In future you will have to self assess every year to declare all your income. Your employer only taxes income earned through his employment of you although if HMRC reduce your tax code to recover tax due on rentals he can assist. As your rental incomes are below 3K per annum then he can do this, but only if HMRC so instruct. You could raise this with that Department when you come clean as to your position. Your Polish tax payment you declare when you self assess. HMRC will only expect you to pay the balance due 11.5% assuming that you are on the basic rate of tax. Yes, I would advice the use of the Let Property Campaign. You fit neatly into one of the categories it it designed to assist. Please be so kind as to rate me before you leave the Just Answer site.
Customer: replied 11 months ago.
On the government website, it says that I should only declare the income if it exceeds £2500 per year:
https://www.gov.uk/renting-out-a-property/paying-taxIn my case, this happened in 2013 & 2015 only and 2013 depends on the exchange rate. Does it mean I didn't have to declare or pay tax for 2012 & 2014?
Expert:  bigduckontax replied 11 months ago.
Yes, but it tells you to ring the Self Assessment Help Line. If you ever get through you will find yourself liable for tax anyway. However, this link may well be a route to code number adjustment. The exchange rate to use use the HMRC exchange rate which you can Google up easily.
Customer: replied 11 months ago.
That is insane, why can't they just say you have to declare any rental income then? Why do they come up with random figures and ask you to call a busy line just to tell you that you have to pay it anyway :-D
Expert:  bigduckontax replied 11 months ago.
Don't ask me, I don't work for HMRC! I suspect this was all organised before the huge reductions in HMRC staff imposed by the current government so they can no longer support the help lines. Now that Department are not issuing code number notifications before the start of the new tax year. As they have got my initial code number wrong these last twenty years I await their antics with interest. Please don't forget my rating.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3379
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 11 months ago.
Thank you for your support.

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