Tax On Rental Income From Uk

[90210]

Hi all!, I have only just found your site and i Have so many questions to ask but i will try to keep one question per post!

My husband and i (uk citizens) are planning to live permanently in phuket in 2 years or so and I, being the worry duck i am , am trying to sort stuff out beforehand and i keep getting more questions!

We plan to rent the UK house out and live from the proceeds in Thailand while possibly working (illegally!).

Does anyone here do this - rent i mean not work illegally- and if so do you have to pay income tax (uk) on what you make from rental. I will be letting through a rental agency and have been told that they will deduct at source unless i can prove otherwise. Since i dont plan on going back to the uk i think this a bit unfair although who knows what may happen and one day i may return so dont want to have the tax man chase me if ever i return!

All thoughts welcome and sorry for the long post!

[Bilko]

We plan to rent the UK house out and live from the proceeds in Thailand while possibly working (illegally!).

!

<{POST_SNAPBACK}>

Why do you want to work illegally?

Edited June 22, 2005 by Bilko

[Clip_My_Wings]

Hi all!, I have only just found your site and i Have so many questions to ask but i will try to keep one question per post!

My husband and i (uk citizens) are planning to live permanently in phuket in 2 years or so and I, being the worry duck i am , am trying to sort stuff out beforehand and i keep getting more questions!

We plan to rent the UK house out and live from the proceeds in Thailand while possibly working (illegally!).

Does anyone here do this - rent i mean not work illegally- and if so do you have to pay income tax (uk) on what you make from rental. I will be letting through a rental agency and have been told that they will deduct at source unless i can prove otherwise. Since i dont plan on going back to the uk i think this a bit unfair although who knows what may happen and one day i may return so dont want to have the tax man chase me if ever i return! 

All thoughts welcome and sorry for the long post!

<{POST_SNAPBACK}>

speak to a financial advisor about this but as of april next year im sure you can sell your house to what is known as a PIPS .. this in fact is yourself, but it is a pension fund.

effectively it means that any any earnt income is not tax deductable as it is a govrnment incentive for people to provide for their own pensions.

the questions you will need to ask is about the logistics of then transferring this money from the fund to a bank account accessible to yourself in thailand

otherwise yes you do have to declare the income to the tax man and pay income tax after your allowances ...

[Thomas_Merton]

Hi all!, I have only just found your site and i Have so many questions to ask but i will try to keep one question per post!

My husband and i (uk citizens) are planning to live permanently in phuket in 2 years or so and I, being the worry duck i am , am trying to sort stuff out beforehand and i keep getting more questions!

We plan to rent the UK house out and live from the proceeds in Thailand while possibly working (illegally!).

Does anyone here do this - rent i mean not work illegally- and if so do you have to pay income tax (uk) on what you make from rental. I will be letting through a rental agency and have been told that they will deduct at source unless i can prove otherwise. Since i dont plan on going back to the uk i think this a bit unfair although who knows what may happen and one day i may return so dont want to have the tax man chase me if ever i return! 

All thoughts welcome and sorry for the long post!

<{POST_SNAPBACK}>

If you are a real worry duck, you should be more worried about doing anything illegal in Thailand - the consequences for a foreigner can be very serious indeed.

[JimsKnight]

Hi all!, I have only just found your site and i Have so many questions to ask but i will try to keep one question per post!

My husband and i (uk citizens) are planning to live permanently in phuket in 2 years or so and I, being the worry duck i am , am trying to sort stuff out beforehand and i keep getting more questions!

We plan to rent the UK house out and live from the proceeds in Thailand while possibly working (illegally!).

Does anyone here do this - rent i mean not work illegally- and if so do you have to pay income tax (uk) on what you make from rental. I will be letting through a rental agency and have been told that they will deduct at source unless i can prove otherwise. Since i dont plan on going back to the uk i think this a bit unfair although who knows what may happen and one day i may return so dont want to have the tax man chase me if ever i return! 

All thoughts welcome and sorry for the long post!

<{POST_SNAPBACK}>

Income tax on your rental. Most of the guys I know who are living off that don't pay a dime! Worry more on the illegal work thing as thats a bowl of noodles in itself!

If you are a real worry duck, you should be more worried about doing anything illegal in Thailand - the consequences for a foreigner can be very serious indeed.

<{POST_SNAPBACK}>

[Dah fahrang]

All income derived in the UK is liable to UK tax - irrespective of where you live.

Rent is income, so is taxable, after deduction of your personal allowances, plus other outgoings such as wear and tear. Add this to the 15% or so you will pay to a rental agent, plus the (possible) irreparable damage to your house by un-caring tenants, a stagnant (fallling in some parts of UK) housing market, and your intention not to return to UK - why not just sell up?

Then put your money in a sterling offshore account in Jersey or similar, earn 4.9% free of all tax (including the new EU offshore tax on EU residents) and live happily ever after - until you get caught or 'shopped' for working illegally in LoS.

Then you can readily get your hands on your cash to pay fines, legal fees and/or tea money.

[samran]

All income derived in the UK is liable to UK tax - irrespective of where you live.

Rent is income, so is taxable, after deduction of your personal allowances, plus other  outgoings such as wear and tear. Add this to the 15% or so you will pay to a rental agent, plus the (possible) irreparable damage to your house by un-caring tenants, a stagnant (fallling in some parts of UK) housing market, and your intention not to return to UK - why not just sell up?

Then put your money in a sterling offshore account in Jersey or similar, earn 4.9% free of all tax (including the new EU offshore tax on EU residents) and live happily ever after - until you get caught or 'shopped' for working illegally in LoS.

Then you can readily get your hands on your cash to pay fines, legal fees and/or tea money.

<{POST_SNAPBACK}>

I didn't think they gave you a personal allowance if you were not resident in the UK....

[Buff-horns]

the problem is finding good tenants who wont trash the place.

it only takes a few years of bad ones and you will need to completly refurb the whole house.

despite the deposit.

i tried it and never again.

what i made in rental has to be spent on a new interior ,and some.

[free sample]

I'm in a similar position except I am selling my house. The inland revenue have a branch that deals with overseas residents. You need to go here:

www.hmrc.gov.uk/nonresidents

If you qualify as a non-resident you are taxed in your country of domicile, i.e. no more UK tax. My reading of this is that you need to be in LOS on a non-immigrant B with a work permit or on a retirement visa. I don't think a multi entry tourist visa will cut the mustard. Happy to be corrected if anyone here has experience to the contrary.

Like other posters have said, don't work in LOS illegaly if you plan to stay awhile.

And if you plan to stay permanently, don't forget the immoral policy of the UK govt in the payment of pensions to overseas residents.

UK posters on tv seem to get by in retirement, I'd be interested in some of their stories.

[90210]

Thanks for the advice all! Now I have more to worry about! I don't WANT to work illegally but if i need to supplement my income i dont think i have the choice of working legally. I would teach english hopefully but without a degree I wont get a work permit and I cant get around that one. I will be 50 in 3 years so then i will get a retirement visa but still wont be able to work. I dont want to sell my house just yet as i want it as a fallback just in case as once i am out of the housing market i wont be able to afford to get back in.

[Rags]

Things may have changed now, but the old approach was to register for the Government's "Non-Resident Landlord Scheme" which I believe was run by a department called FICO(?). To be eligible you had to state/prove that you would be non-resident for more than one year - but best check the current situation!!

This scheme meant that your rental income was not taxed at source. Then at the end of the tax year you would do the normal tax return for this and all other UK derived income (being sure to deduct mortgage interest payments, wear & tear etc), and you would pay tax on anything above your normal UK tax allowance.

Rags

[ProThaiExpat]

90210 is the zip code for Beverly Hills, California, USA????????

[Rags]

90210 is the zip code for Beverly Hills, California, USA????????

<{POST_SNAPBACK}>

Obviously fans of Brandon & Brenda, rather than Stan and Hilda....

I am guessing that the Thai soap operas will come as a bit of a shock to them

[RDN]

90210 is the zip code for Beverly Hills, California, USA????????

<{POST_SNAPBACK}>

She's obviously a fan of the program

[Steve2UK]

Thanks for the advice all! Now I have more to worry about! I don't WANT to work illegally but if i need to supplement my income i dont think i have the choice of working legally. I would teach english hopefully but without a degree I wont get a work permit and I cant get around that one. I will be 50 in 3 years so then i will get a retirement visa but still wont be able to work. I dont want to sell my house just yet as i want it as a fallback just in case as once i am out of the housing market i wont be able to afford to get back in.

<{POST_SNAPBACK}>

You're right to "worry" - but do it positively as in reading as much as you can on this forum (particularly the Visa and Teaching sections - you might also want to look at www.ajarn.com about the teaching aspect). But what others have said is true - working without a work permit is very risky; you can be given just 7 days to leave Thailand and be blacklisted for a period after that.

Phuket is not cheap compared to other places in Thailand - are you sure that's where you have to be? Have you been to Thailand at all before? A holiday is one thing, but living here is usually another. If I were you, I would allow at least 6 months to a year to check out the prospects with all the ins and out of what income you might get from renting your UK home versus the living costs in Thailand......... you might even be pleasantly surprised and discover that it could just work if/when both of you are 50+. Broadly speaking, your £ buys about 5 times more in Thailand - though not if you maintain all-European habits of eating etc. Message: every £ you can put away now will really matter if/when you're living in Thailand.

Personally, I'm with you on not selling the UK home at the beginning - make sure that you've made the right move with at least a couple of years of renting (that UK home is your lifeboat if you decide later that Thailand's not for you).

[simcity]

i do not know about UK , but in Australia after a few year of rental you own home switch to investment property with capital gain !

[Phil Clark]

If you qualify as a non-resident you are taxed in your country of domicile, i.e. no more UK tax.  My reading of this is that you need to be in LOS on a non-immigrant B with a work permit or on a retirement visa. I don't think a multi entry tourist visa will cut the mustard. Happy to be corrected if anyone here has experience to the contrary.

As far as I am aware, your visa status in Thailand has no bearing on your Tax status in UK.

‘Domicile’ can also be a misleading term as can ‘non-resident’ when it comes to financial rape.

You can declare yourself as ‘Non-Resident’ for UK Tax purposes and you may be able to get Bank/Building Society interest paid gross in UK, not that that means you will not be assessed on it. However, you will not be able to get around being taxed at source on UK Company Dividend Income. Tax Credits can only be used to help you avoid higher rate tax rates as far as I know but the pound (kilo?) of flesh is already gone.

Rental Income is the same. If an Agent knows you are out of the country from more than six months of the year, they are obliged to collect your rent and deduct tax at source. If the tenabts pay you, they are supposed to do likewisese (?).

22% was the last number I recall but have not checked recently.

Have a look at: We will shaft you! and go from there.

One piece of advice: NEVER contact the Inland Revenue with your details asking for advice as they will weld themselves to you…

The current rules are a moving target so anyone with up to date info please do share.

‘Stealth Tax’ is all the rage in UK from what friends tell me and that is for people who have no choice but to live there. I somehow doubt the Revenue will give incentives to those Brits with the sense to get out. I think it more likely they will eventually copy their supposed American ‘masters’ and deem all global income as arising in UK and therefore taxable.

A chilling thought…

[Welsh John]

I will have the same problem in the future but all is not lost.You are able to get rental incime paid gross if you fit the critera.

That still does not detract from the fact that the UK Revenue are a robbing load of gits.

Read the IR Form 150 and it will explain.

IR 150 Here

Edited June 23, 2005 by Welsh John

[Phil Clark]

I will have the same problem in the future but all is not lost.You are able to get rental incime paid gross if you fit the critera.

That still does not detract from the fact that the UK Revenue are a robbing load of gits.

Read the IR Form 150 and it will explain.

IR 150 Here

<{POST_SNAPBACK}>

Diolch Yn Fawr John, but do you have a more precise link?

As with all the Inland Revenue bureaucratic boll*cks you often have to refer to deleted statements with no guide to the one that supercedes.

Could you please post the latest sub-link?

Cheers.

[90210]

[she's obviously a fan of the program

No, i dont watch the programme at all! Its just a sort of nickname that stuck!

[90210]

Phuket is not cheap compared to other places in Thailand - are you sure that's where you have to be? Have you been to Thailand at all before?

I am open to where i go but my husband has friends in phuket which is why there. I know roughly what i will get IF i can rent my house which is enough per month to live on in Thailand but maybe not if i have to pay heaps of tax in the UK!!

I have been to thailand on a few occasions and i know that a holiday is something else but i dont care much for material things really and dont smoke or drink ( god i sound really boring!) and after speaking to various people i know there and in vietnam i know that the lifestyle will be VERY different am trying to start reading up now so i know as much as i can before i go. I am trying to learn thai as well! I am not expecting a holiday and to be honest being there illegally scares the sh** out of me although I know people who have been doing it for years but dont know wether I could do it or not.

[Clip_My_Wings]

Phuket is not cheap compared to other places in Thailand - are you sure that's where you have to be? Have you been to Thailand at all before?

I am open to where i go but my husband has friends in phuket which is why there. I know roughly what i will get IF i can rent my house which is enough per month to live on in Thailand but maybe not if i have to pay heaps of tax in the UK!!

I have been to thailand on a few occasions and i know that a holiday is something else but i dont care much for material things really and dont smoke or drink ( god i sound really boring!) and after speaking to various people i know there and in vietnam i know that the lifestyle will be VERY different am trying to start reading up now so i know as much as i can before i go. I am trying to learn thai as well!  I am not expecting a holiday and to be honest being there illegally scares the sh** out of me although I know people who have been doing it for years but dont know wether I could do it or not.

<{POST_SNAPBACK}>

you should to compare the value of your house, your expected rental income, and the interest yield you could expect from investing the proceeds of selling

for instance if you have a 3 bed house valued at £205,000 and expect a rental income of £750 a month

now you sell the house and could put the money into a % interest bearing account earning £10,000 a year

rental income is £9000 minus estate agent admin costs, minus any repairs ...

the other thing to bear in mind is the changing value of house prices ... in my opinion house prices have peaked and vulnerable to decline in the next 1-3 years ... so feasable you could spend your £10,000 income in a year and still have your £200,000 initial invest to buy a relatively cheaper house in england in 2 years time should it go horribly wrong ..

just an idea

[RDN]

you should to compare the value of your house, your expected rental income, and the interest yield you could expect from investing the proceeds of selling

for instance if you have a 3 bed house valued at £205,000 and expect a rental income of £750 a month

now you sell the house and could put the money into a % interest bearing account earning £10,000 a year

rental income is £9000 minus estate agent admin costs, minus any repairs ...

the other thing to bear in mind is the changing value of house prices ... in my opinion house prices have peaked and vulnerable to decline in the next 1-3 years ... so feasable you could spend your £10,000 income in a year and still have your £200,000 initial invest to buy a relatively cheaper house in england in 2 years time should it go horribly wrong ..

just an idea

<{POST_SNAPBACK}>

Good points, CMW. I went through this process a few years ago and decided the hassles of maintaining and renting a house through an agent in the UK were not worth the effort. So I sold and invested in corporate bonds - from which you can take 5% tax free each year.