Tax etc on Foreign Rental Earnings

[Fatman]

Im interested on what taxes etc, Ill have to pay on Rental fees produced outside of the UK.
What do I have to tell the Taxman?
Do I have to register as self employed?
Do a tax return etc etc?
Could I create a company earn my rental income via that?

So many questions!

 

[Sanchez]

Found this website today .... WealthProtectionReport.co.uk - Offshore Tax, Tax Havens and Overseas Property Tax Information seems pretty informative.

 

[Fatman]

Ive just been told, If I buy a property in Tunisia, I dont have to pay Uk tax on the eanrings if the money is paid into a Tunisian Account...

 

[Sanchez]

Hmmmmm, who told you that ?

 

[Fatman]

Hmmmmm, who told you that ?

The agent...

 

[Sanchez]

LOL, that's what I thought.
I'm guessing you live in the UK ... ?
What he means is that if you put your rental income into an account in Tunisia and don't declare it, then it will be hard for the tax man to find it.

 

[Fatman]

Right ok, but then what if I want to get at the money?

 

[Sanchez]

A trip to Tunisia with large pockets ............. : - )
You can bring approx 10 000 Euros per person back into the UK without having to declare it to customs ...
When it comes down to it hardly anyone pays tax on offshore income. I think if giving advice to people though you have to give them the legal option .... what they do after that is up to them. : - )

 

[agentkhoo]

I don't think that UK will double tax it citizens if the income is reported in the country of origin of the income. So if you invest the money in another commonwealth country - like India, Malaysia or Singapore, they do not levy taxes on you again should you repatriate the monies.

There is no capital gains tax in Singapore - just normal Income tax, which anyone doing business or earning an income within our borders will have to pay an income tax.

 

[Sanchez]

I understood that if a country has a double tax agreement with the UK, then the "difference" in tax will be charged. If no tax is paid in Tunisia, then the difference is the full tax in the UK .... : - )

 

[gfplux]

I understood that if a country has a double tax agreement with the UK, then the "difference" in tax will be charged. If no tax is paid in Tunisia, then the difference is the full tax in the UK .... : - )

ABSOLUTELY CORRECT

 

[kusadasisun]

In Turkey you are given a tax reference number when you purchase a property. Rental income up to about 2000 pounds is not subject to tax. You can tax deduct about 15% of your rental income as depreciation cost. Remaining monies are subject to tax, similiar to what you have in the UK as you earn more your tax rate goes higher with the max rate at 35%. There are double taxation agreements between Turkey and UK, so you won't need to pay any taxes in UK assuming you already paid them in Turkey and you didn't bring the profit to UK. So as long as you spend these monies in Turkey, there won't be any problems and your taxes will be quite low.

 

[Sanchez]

are u sure about the bit where you say you won't be taxed unless you bring the funds into the UK ... ??? Double Taxation agreements don't normally mean that ....... it normally means that you only need to pay the differnece in tax between the two countries.
In your example if a country had a tax rate of 1%, then you would only pay 1% tax on income.
This is incorrect. Additionally it doesn't matter if you reit the funds into the UK or not.
It's all taxable.

 

[sharon333]

I would have to agree with you on that one. Every thing is fair game to tax,

 

[kusadasisun]

It is not possible to put all countries into one basket. Every country is different.

In US, there are some certain tax exemptions for foreign income, e.g. up to 70K $ is exempt from US taxes. In Australia, there are no exemptions, it just works as you described, they make you pay the full amount, as Australia has 47% marginal tax rate, you always pay tax to the Aussie Taxman. In UK, AFAIK if you pay your foreign tax, and if you don't bring your savings to UK then that money is clean money. But if you bring your savings to UK, then you need to pay UK taxes if UK tax rates are higher. I don't know how it works for Ireland. Tax rules change all the time anyway

 

[Sanchez]

Completely wrong ...... Suggest you do a little reading up on UK tax laws ..... : - )

 

[mickthepropertyguru]

Well put very simply and roughly,
if you are a resident in the UK you must declare income from any overseas property. If you have paid tax in the overseas country you usually can get credit on this against the UK tax you have to pay.
You have to declare any income you get from overseas property lettings on the supplementary foreign pages of the Self Assessment tax return.

You will have to pay tax on any income generated whether or not you bring the money back to the UK. This is know as "arising basis" of assessment.

The amount of Tax you pay is determined by your status, a "resident" in the UK, "ordinary resident" or "domiciled".
You can deduct allowable expense from the rental income to get you net taxable profit. This is then taxed at nominal rate.
Could anybody add or deduct from what i have said ?

 

[Sanchez]

Well put Mick ........ I didn't have the energy left to explain it fully.
Only thing to add......
"Non-domiciled" UK residents who have been in the UK for less than 7 of the last 10 years can use the remittance base for offshore taxation as opposed to "arising basis".
For a descriptions of domicility status go to the HMRC website.
Being a Kiwi, I'm resisdent, ordinarily resident but non-domiciled ... Giddyup !! : - )

 

[Sunnyshores]

I think we can safely say - Any UK citizen, residing in the UK will pay tax on ANY money they receive from ANYWHERE in the world.

Recently the taxman has got very savvy and I belive they have departments that spend their days looking at adverts for rentals and tying them up with people's tax returns. Plus the possibiloity that you may annoy someone and they report you. Really, not worth risking the nightmare that would be the taxman knocking at your door ....

My concerns are filling in the tax returns in various countries and then completing the Uk one listing all the others. WOuld be great if there was one company (property related tax experts) that would do all this. I found one company that did some countries, but they charged £450 per return. Thats £900 per country for me and my partner saying we earnt very little!