House In Uk-living In Thailand And Cgt

[90210]

I think I shall have to see an accountant about this one but I cant be the only one. If I own a house in uk but decide to live in thailand ( or elsewhere come to that) should I declare myself non -resident in the UK? if so what are the benefits? If i rent the UK house I am liable to pay UK income tax i know. if i either leave it empty or rent it for say 5-6 years then decide I want to go back to the UK am I liable for CGT on the property since i left? Or does this depend on if I am 'resident' in the UK. I cant be the only one who rents out property so i am looking for views on whats best. My idea was that I would rent it out for at least 2 years to decide if the new life is for me then decide what to do. Aftre looking at th e inland revenue website it just confuses me!!

[Blake7]

I think I shall have to see an accountant about this one but I cant be the only one. If I own a house in uk but decide to live in thailand ( or elsewhere come to that) should I declare myself non -resident in the UK? if so what are the benefits? If i rent the UK house I am liable to pay UK income tax i know. if i either leave it empty or rent it for say 5-6 years then decide I want to go back to the UK am I liable for CGT on the property since i left? Or does this depend on if I am 'resident' in the UK. I cant be the only one who rents out property so i am looking for views on whats best. My idea was that I would rent it out for at least 2 years to decide if the new life is for me then decide what to do. Aftre looking at th e inland revenue website it just confuses me!!

<{POST_SNAPBACK}>

I have a house in the UK which I rent out and don't pay any tax on the income. You just need to fill in a form (forget its number) and declare yourself non resident. The only drawback of being non resident are that you cannot apply for certain UK investment vehicles etc.

[Pattaya_Fox]

I think I shall have to see an accountant about this one but I cant be the only one. If I own a house in uk but decide to live in thailand ( or elsewhere come to that) should I declare myself non -resident in the UK? if so what are the benefits? If i rent the UK house I am liable to pay UK income tax i know. if i either leave it empty or rent it for say 5-6 years then decide I want to go back to the UK am I liable for CGT on the property since i left? Or does this depend on if I am 'resident' in the UK. I cant be the only one who rents out property so i am looking for views on whats best. My idea was that I would rent it out for at least 2 years to decide if the new life is for me then decide what to do. Aftre looking at th e inland revenue website it just confuses me!!

<{POST_SNAPBACK}>

My understanding on this is that for pre acquired assets i.e. assets acquired before you left the UK and if the house in the UK is not your main residence i.e. you are living in Thailand then after 5 full tax years you will not be required to pay CG Tax.

If you declare that the house in the Uk is not your main residence and you decide to sell it say after 2 years then you will probably have to pay CG Tax.

It may be to your advantage until you have decided about your position to let the house out on short term tenancy agreements and return to the Uk and live there for a few months thus maintaining that the UK house is your main residence....after all many people go away on holiday for a few months at a time and then return.

I would also suggest that you maintain your UK doctor with your UK address as this may save you possible problems in the future obtaining treatment on the NHS.

[Blake7]

Sorry what do you mean by CG tax?

Edited August 11, 2005 by Blake7

[Pattaya_Fox]

Sorry what do you mean by CG tax?

<{POST_SNAPBACK}>

Capital Gains Tax.

[Blake7]

Sorry what do you mean by CG tax?

<{POST_SNAPBACK}>

Capital Gains Tax.

<{POST_SNAPBACK}>

Ah. Well after I filled in the form I received a letter from the inland revenue saying that I would not have to pay tax on the rental income. does this mean they can decide to back tax me in the future?

[90210]

I have a house in the UK which I rent out and don't pay any tax on the income. You just need to fill in a form (forget its number) and declare yourself non resident.

I will look into this a bit more. I found the Inland revenue site a bit hard going to be honest. I thought that if I rented via an agent and was non- resident then they legally have to deduct tax? I cant see the Inland revenue trusting me to say ...well actually yes I do have some income to declare!!!

[loong]

I have a house in the UK which I rent out and don't pay any tax on the income. You just need to fill in a form (forget its number) and declare yourself non resident. The only drawback of being non resident are that you cannot apply for certain UK investment vehicles etc.

Is this true?

If a non-resident, no tax on rental income?

I thought that if you have your rented property in the hands of an agent, the agent has to make a deduction for tax before forwarding the remainder to you.

I would also suggest that you maintain your UK doctor with your UK address as this may save you possible problems in the future obtaining treatment on the NHS.

A non-resident is no longer entitled to treatment on the NHS.

Anyone spending more than 6 months per year outside UK is no longer entitled.

Rights can be reinstated by declaring that you are returning to live in UK permanently

Edit

Sorry repeated what 90210 said, we were writing our posts at the same time

Edited August 11, 2005 by loong

[mrbojangles]

Sorry what do you mean by CG tax?

Capital Gains Tax.

Ah. Well after I filled in the form I received a letter from the inland revenue saying that I would not have to pay tax on the rental income. does this mean they can decide to back tax me in the future?

You really are better off seeing an accountant for individual cases. But it is my understanding that once you start renting out your house it becomes a business. Therfore, if you sell at a later date you will have to pay Capital Gains (CG) on any profits made unless you make it your main residence again. There is then a sliding scale as to how much CG you pay depending on how long you have lived there. If you have a mortgage, you should also inform your lender of this change in circumstances and then they will probably increase your interest rate to suit as it would change to a "buy to let" loan. I always inform my lender so they can increase my interest rate

[loong]

it is my understanding that once you start renting out your house it becomes a business.

Unless things have changed, you can rent out a property (that was your main residence) for 3 years before it will be viewd in this way

[mrbojangles]

it is my understanding that once you start renting out your house it becomes a business.

Unless things have changed, you can rent out a property (that was your main residence) for 3 years before it will be viewd in this way

Well, that is sort of right Loong, which is why i started with "best to see an accountant" as individual cases differ so much. But in the main you have to show that the property was your only home throughout the period you owned it (ignoring the last three years of ownership) and that you bought it to use as your home rather than to make a profit. So, if you bought a house today and rented it out next month for 3 years, you'd be in a tricky situation. Whereas, if you lived in a house for the last 20 years and then rented it out for 3 years, no problem. It gets iffy after that i.e. you've been renting it out for 5 or 10 years etc.

[loong]

Well put, Mr Bo

[cmsally]

A lot depends on how long you have lived in property before leaving and in which tax bracket you are in. If not in top tax bracket rental agent should be able to help you with form for getting tax free rental income.

CGT will only apply if you are selling house and as a non resident you should be able to sell a property without paying it even if not your prime residence.

This website might help:

http://www.offshore.hsbc.com/1/2/internati...-leaving-the-uk

This forum also very good:

http://www.taxationweb.co.uk/forum/

[Steve2UK]

I have a house in the UK which I rent out and don't pay any tax on the income. You just need to fill in a form (forget its number) and declare yourself non resident. The only drawback of being non resident are that you cannot apply for certain UK investment vehicles etc.

<{POST_SNAPBACK}>

Rather puzzled by this - my accountant told me that income earned in the UK (e.g. rental of a UK property) is always liable to income tax. Quoting from the HSBC link in CMSally's post:

Q. Will I have to pay tax in respect of UK investment income earned while overeas?

A. You will be liable to tax in respect of investment income arising in the UK (e.g. income from a UK property, UK bank or building society, dividends from UK corporations).

Taxable rental income is calculated by deducting from gross rental receipts any qualifying business expenses, so long as they are incurred wholly and exclusively for the rental business and are not capital in nature (e.g. mortgage interest, management fees, repairs, insurance, rates, 'wear & tear' allowance equal to 10% of gross rent where the property is furnished).

If a property is held jointly with your spouse the income and expenses must be split equally between you and your spouse, and reported on each of your UK tax returns.

Letting agents (or tenants where there is no letting agent, and the rent payable is more than £100 a week) of any non-resident landlord must deduct basic rate tax from the landlord's UK rental income, and pay the tax to the Inland Revenue. Non-resident landlords can apply to the Inland Revenue for approval to receive their rental income with no tax deducted. (Note: This does not mean that the rent is exempt from UK tax.) * In return the Inland Revenue will usually ask the landlord to complete a Self Assessment Tax Return to calculate whether he or she has any liability to UK tax. This application is made by completing form NRL1,"Non-resident landlords - Individuals".

* My bold emphasis

[Steve2UK]

A non-resident is no longer entitled to treatment on the NHS.

Anyone spending more than 6 months per year outside UK is no longer entitled.

Rights can be reinstated by declaring that you are returning to live in UK permanently

<{POST_SNAPBACK}>

Loong, not wanting to say you're wrong, but can you say where you got this information from? I've been asking about it on another thread and I'd like to be 100% sure.

[Dawn]

Thought I'd throw this one at you all. We're planning to sell up in the UK and use the money we make to buy a property in Italy (to rent out) and will be using the left over cash to buy land and build a house in LOS. Will we have to pay CG's on the profit made from selling the house in the UK or am I right in thinking that if you use the profit to buy another property (in Europe) that you get around this?

Any help/advice would be greatly appreciated!

Cheers!

[Vulture]

Dawn, there is no CG to pay on the sale of your only or main residence (that you have continually lived in without letting).

[Dawn]

Cheers Vulture! Always glad to keep the tax man off my back

[Dawn]

Actually, I've let out the property on a 2 occasions but not for very long periods of time. This was done privately, without the help of a letting agent and the only people that knew about it were the housing benefit people in the UK (the 2 people renting from me claimed housing benefit/council tax rebate).

How would that work then? Do they do checks?

[loong]

Actually, I've let out the property on a 2 occasions but not for very long periods of time. This was done privately, without the help of a letting agent and the only people that knew about it were the housing benefit people in the UK (the 2 people renting from me claimed housing benefit/council tax rebate).

How would that work then? Do they do checks?

<{POST_SNAPBACK}>

Housing benefit for rent is handled by the local council and Inland revenue is unlikely to be aware. If they were aware, they would have been after you for their slice of the rental

The Inland revenue, same as most civil service agencies has to many Chiefs and not enough Indi...............errr Native Americans

If you have only rented for short periods, while on extended holiday and it has remain your only residence, capital gains tax should not apply.

But I'm not a tax expert.

[loong]

A non-resident is no longer entitled to treatment on the NHS.

Anyone spending more than 6 months per year outside UK is no longer entitled.

Rights can be reinstated by declaring that you are returning to live in UK permanently

<{POST_SNAPBACK}>

Loong, not wanting to say you're wrong, but can you say where you got this information from? I've been asking about it on another thread and I'd like to be 100% sure.

<{POST_SNAPBACK}>

Steve, here are 2 links, as with most things can be a little heavy going

Hope it helps

http://www.dh.gov.uk/PolicyAndGuidance/Int...&chk=qv2fY/

http://www.dh.gov.uk/PolicyAndGuidance/Int...&chk=uhB/w0

[cmsally]

Sorry a hurried reply before. The form for non resident landlords is so that letting agents only deduct their fees not tax before they pay to you. You are still liable to pay tax on that rental income . You will then be taxed on that rental income and any other income arising from UK. Of course depending how much of your other income you can move offshore you can improve your tax position.

[malcolminthemiddle]

leading the

[Dragonman]

A non-resident is no longer entitled to treatment on the NHS.

Anyone spending more than 6 months per year outside UK is no longer entitled.

Rights can be reinstated by declaring that you are returning to live in UK permanently

<{POST_SNAPBACK}>

Loong, not wanting to say you're wrong, but can you say where you got this information from? I've been asking about it on another thread and I'd like to be 100% sure.

<{POST_SNAPBACK}>

Steve, here are 2 links, as with most things can be a little heavy going

Hope it helps

http://www.dh.gov.uk/PolicyAndGuidance/Int...&chk=qv2fY/

http://www.dh.gov.uk/PolicyAndGuidance/Int...&chk=uhB/w0

<{POST_SNAPBACK}>

The crux of the matter is that it is up to the doctor or hospital involved. So there are no hard and fast rules. I've personally never heard of anyone being asked to provide evidence they reside in Uk. But I'm sure that in parts of England they do. For instance my dentist knows I live in Thailand but he couldn't care less. I still get treatment. In fact a number of Health Trusts are frightened to enforce any rules due to Human Rights issues.

[sua yai]

I've been renting my property out in London for the past 7 years and living here. The situation is really very simple - asuming you're employing an agent.

1. If your agent manages the property for you as well - taking care of maintenence issues and daily contact with the tenants - then they almost certainly will insist that you register with the IR as a non resident landlord living abroad. The relevent office used to be in Liverpool, but your agents will know and have the forms. This part is dead easy. You'll pretty much be guaranteed that status.

You're allowed back into the UK for up to 90 days in any one tax year, without losing your status.

Benefits of this are that the agents pay your rent gross of tax and you account for it at the end of the year. Agents don't want to be involved with your tax affairs.

2. Income from property - used to Schedule A Income Tax - is certainly liable for Uk tax, even if you're living abroad. It's income earned in the UK.

However, there's a whole raft of things that you can offset against it - agents fees, personal allowance, any maintenence, 10% wear and tear, accountants fees etc, etc - if you use one, I do it myself now.

To give you an example, I usually pay 250-300 pounds tax a year on income of over 17,000. So, tax liability is negligible if your return is completed correctly.

3. CGT. My understanding of this is that you must demonstrate that the property is your primary residence. I don't think it matters an iota how long you've been out of the country, as long as you satisfy the IR of this.

So, in my situation, if I wanted to sell, I'd need to return to the UK and live in the property for a reasonable amount of time before putting it on the market - I've been advised 6 weeks - 2 months is sufficient. It also helps if you sign on for the electoral register again and pay council tax. That way there is no CGT.

Hope that helps. It was daunting for me for the first couple of years, so I had an accountant. After that, I take care of tax affairs myself and save 300 pounds a year. More beer.

[loong]

2. Income from property - used to Schedule A Income Tax - is certainly liable for Uk tax, even if you're living abroad. It's income earned in the UK.

However, there's a whole raft of things that you can offset against it - agents fees, personal allowance, any maintenence, 10% wear and tear, accountants fees etc, etc - if you use one, I do it myself now.

To give you an example, I usually pay 250-300 pounds tax a year on income of over 17,000. So, tax liability is negligible if your return is completed correctly.

Sua Yai

As a non-resident tax payer, do you still get the personal allowances then? That is something that I have been unable to find out.

I don't object to paying tax on my rental income, but wasn't sure whether to go down the non-resident route as I was concerned that I may have to pay tax on the whole amount of income with no personal allowance

I'm intrigued to know how you manage to only pay £250 tax on an income of £17,000. Must have a lot of expenses.

From most posts here, it appears that as a non resident, no capital gains tax is due.

So what happens if a non resident purchases a property and later sells it at a profit. If no capital gains, would the profit be treated as income for tax purposes? This would not be good as the £7000 plus capital gains allowance would not be offset against it.

[Ice Maiden]

I'm going to have to think about all this stuff when I' older....Great.

The housing benefit were rubbish with me when I was living alone at sixteen. They delayed my payments for two months.

[sua yai]

Loong,

Yes, you still get the personal allowance.

As I mentioned, if you use an agent and I would advise that, they'll probably insist you go down the non resident route. Mine does, but only as they manage the place as well. From a cash flow point of view, I'd much prefer to get my rent gross of tax first, rather than claim it back. Much easier.

The amount of tax I pay varies year by year, but that was an avarage. All maintenence costs are deductable and I've claimed back, against tax, four seperate return flights to the UK as I was going back to take care of my property - a legitimate business expense. Maintenence costs can be high. I would expect to invest 15-20% of my rent in that way.

There's no income tax on profit from a sale - it's taxed under capital gains, if applicable.

You'd certainly be best to consult an accountant in the first instance about CGT, but my last post gave my understanding of the situation as it is for me now.

[loong]

Thanks Sua Yai

Think I will have to have a word with an accountant and decide my best path from some expert advice

[sua yai]

Good idea loong,

I did for the first two years here. They didn't charge much, as I've said, because my tax affairs are fairly simple.

Once I thought I could do it myself, I did and The IR have been OK since.