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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4883
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I have lived in Dubai years, I am a British passport

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I have lived in Dubai for 10 years, I am a British passport holder - I have never submitted any forms to the IR that I can remember. I have now bought an offplan property in the UK and need to understand what tax I have to pay? I am also considering buying another 2nd property but understand there are changes in regards ***** ***** duty and upcoming (2017 - 2021) changes to Restricting finance cost relief for individual landlords. I want to be able tom calculate and understand how much tax I will pay on these properties based on these changes each year from 2017 - 2021 and beyond). Who is the best person/company to speak to?
Many Thanks
Kaye
Submitted: 11 months ago.
Category: Tax
Expert:  taxadvisor.uk replied 11 months ago.
Thank you for your question.. Please clarify for meAre you still living in Dubai and deemed non-resident in the UK for tax purposes or are you back in the UK?Do you propose living in one property and use the 2nd property as an investment? Many thanks
Customer: replied 11 months ago.
Hello, I am still living in Dubai and I don't intend at the moment or the near future to live in either property.Many Thanks,
Expert:  taxadvisor.uk replied 11 months ago.
Kaye, thank you for your reply and for clarification.Please leave it and I will revert to you shortly with my answer.Many thanks
Expert:  taxadvisor.uk replied 11 months ago.
Thank you for your patience. You have stated I am still living in Dubai and I don't intend at the moment or the near future tolive in either property. I have now bought an off plan property in the UK andneed to understand what tax I have to pay? I am also considering buying another 2ndproperty but understand there are changes in regards ***** ***** duty and upcoming(2017 - 2021) changes to Restricting finance cost relief for individual landlords. Self AssessmentYou say you have been living in Dubai for the past 10 years and you have never submitted a UK tax return that you can remember. In that case, you should register for self-assessment asyou would be in receipt of property income in the UK. You can register online by completing form SA1 and once registered you would be given a unique tax reference number. The link for completing form SA1 and information on registration can be found herehttps://www.gov.uk/register-for-self-assessment/not-self-employed Income tax implicationsAs a non-resident landlord, any rental income you earn from UK based properties would be subject to UK income tax. As a UK National, you would get UK personal allowance as if you were resident in the UK – this tax year’s personal allowance £11,000.You can get your rent either in full and pay tax through self-assessment if HMRC allows you to do this or with tax already deducted by your letting agent or tenant.You need to fill in form NRL1i and send it back to HMRC if you wish to pay tax on your rental income through self-assessment. More information on this and to form NRL1i can be found herehttps://www.gov.uk/tax-uk-income-live-abroad/rent Stamp duty implicationsAs your next property purchase would mean that you own more than one residential property in the UK, this purchase would be subject to higher rate of stamp duty (3% on top of the normal rate applicable based on purchase price of the second home). More information on this can be found herehttp://www.theguardian.com/money/2016/mar/31/stamp-duty-second-homes-what-will-i-pay Restrictions on finance costs against rental incomeThe restrictions start in tax year 2017/18 and are fully effective in 2020/212017/18 - one quarter of the interest being restricted to basic rate tax and the rest marginal rate of tax2018/19 – one half of the interest being restricted to basic rate tax and the rest marginal rate of tax2019/20 – three quarters of the interest restricted to basic rate and the rest marginal rate of tax2020/21 – all interest paid restricted to basic rate of tax How the restriction of relief on buy to let mortgage interest will affect landlords is explained herehttp://www.mortgagesforbusiness.co.uk/news-insight/2015/july/how-the-restriction-of-relief-on-btl-mortgage-interest-will-affect-landlords/ 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 10 months ago.
Thank you / can you help me with an example calculation say 1700 rent per month X 12 - tax deductions based on the year minus the 11000 allowance equals the amount? Or even an example based on 2021 when there can be no deductions? Much appreciated
Expert:  taxadvisor.uk replied 10 months ago.
Thank you for your reply.Please advise interest on loan if any..as the changes are to relief available on interest paid on buy to let properties. Many thanks.
Customer: replied 10 months ago.
I will either go with a 3.99 rate or 3.99 rateMany thanks
Expert:  taxadvisor.uk replied 10 months ago.
Kaye, thank you for your reply..You would receive personal allowance every year. The changes are to tax relief available on interest paid on loans relating to buy to let properties.If you remain non resident of UK for UK tax purposes and your only income arising in the UK is rental income then the changes to relief on interest paid would not affect you as your total income will be within the basic rate of tax and you would be able to offset total interest paid on loan against the rental income.Say your rental income is £1,700pm or £20,400pa. As this is well below the threshold for higher rate tax, the changes to restricting finance cost relief to individual landlords does not apply in your scenario. I hope this is helpful and answers your question.I will appreciate if you would kindly rate my service/accept the service I have provided before you leave the site, to ensure I get credited for it by Just Answer.
Expert:  taxadvisor.uk replied 10 months ago.
Based on rental income of £20,400 and personal allowance of £11,000, your taxable income is (20,400-11,000) £9,400. Your rental income would be reduced by offseting allowable expenses against it including interest on loan and any agent's fee for management of property etc.Maximum tax payable is (9,400 x 20%) £1,880. I hope this is helpful.
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4883
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Expert:  taxadvisor.uk replied 10 months ago.
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