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bigduckontax, Accountant
Category: Tax
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How do I claim back the Tex reserve payment that my property

Resolved Question:

How do I claim back the Tex reserve for FICO payment that my property agent is withholding every month? I am based in HK and have three properties in England all rented out (no debt). But the reserve tax is significant. The agent claims I have to sort it out. I am a UK citizen and passport holder. Full British citizenship born in England.
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
Tax reserve (not Tex)! Thanks...
Expert:  bigduckontax replied 1 year ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

Firstly, when you moved to HK did you complete a Form P85 and send it to the Inland Revenue as it was then? If you did not you should do so immediately, but of course now to HMRC. Fortunately there is no time limit as to its submission, it is available on the web and can be filed on line. On receipt HMRC will classify you as non resident for tax purposes. Once so classified you can spend up to 91 days in the UK in any one tax year without breaching your non residential status.

However, even non resident you are still liable to UK Income Tax (IT) on your UK rented property income. As an EEA citizen you are entitled to the usual personal allowance (11K this tax year, 10.6K last). Claims for a rebate on any UK IT deducted are dealt with by HMRC's Nottingham Office, NG6 1AB. If your net rental income is below your personal allowance you can ask that office for no tax to be deducted in future.

Always bear in mind that this rental income may be taxable in HK also, but under the Double Taxation Treaty between the UK and HK the same income stream cannot be taxed in both jurisdictions. This is achieved by means of tax credits, the tax deducted in one country being allowed as a tax credit against any liability in the other. The treaty does not, however, protect you from differences in rates of taxation.

I do hope that you have found my reply of assistance.

bigduckontax and 2 other Tax Specialists are ready to help you
Customer: replied 1 year ago.
TBH I cannot remember if I completed a P85 form as it was more than 27 years ago. I did get a couple of tax demands for 1 penny and a letter informing me that the amount would be carried over to my next bill; subsequently I received a GBP100 fine. On the advice of the HM ILR representative I paid the fine. The same happened the following year and I again paid the fine as I was told it was a know glitch in the system. The year after I received a GBP300 tax refund! If I am unsure of whether or not I have completed the P85 I presume I would be best completing one now?
Customer: replied 1 year ago.
The rental income will be below the tax threshold...
Expert:  bigduckontax replied 1 year ago.

Thank you for your support.

It is always a good idea to do P85 action; it makes life so much easier for you in any dealings with HMRC.

Even if your rental income is below your personal allowance you are still required to declare it unless HMRC, as they may well, tell you not to bother in future. Even that Department sees no point in processing returns which yield no revenue.

One company I did the accounts for received a Corporation Tax demand for seven pence, yes 7P! I paid it at the Post Office on the last day and the Postmaster roared with laughter pointing out that the sheer costs alone of processing it would outweigh the tax!

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