Expat Property Tax for British Nationals

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British Expat Property Tax
British Expat Property Tax

If you let your home whilst you are abroad, the rental profits will be liable to UK tax as UK source income regardless of your residence status. Some points to note are that:

  • property rental is treated as a business and the profit is calculated using business accounting rules;
  • expenses can be claimed against the rental income, such as repairs, maintenance, insurance, agent’s fees, wear and tear of furniture etc. A deduction can also be made for interest paid on a loan taken out to purchase the property in cases where it is beneficial to withdraw from MIRAS (note: MIRAS is abolished from 6 April 2000);
  • if allowable expenses exceed the rental income, the loss can usually only be set off against future rental income, not against your other income.

Where a property is let by a landlord who goes abroad for a period exceeding six months, a UK agent or tenant is required to withhold tax at basic rate on the net profit and pay this to the Inland Revenue on a quarterly basis. However, is it possible to make a formal request to receive the rents in full and settle the tax liability yourself through the self assessment tax return. This is achieved by completing form NRL1 and sending it to the Financial Intermediaries and Claims Office. Provided you have a satisfactory tax history, the Inland Revenue is likely to agree to your request.

 

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