Do I Have To Pay Income Tax On The Rent From A Commercial Property In The Uk?

[tomhuayyai]

Help wanted please

Do I have to pay uk income tax on the rent from a commercial property I own in the uk? I have no other uk income. There is no mortgage.

Many thanks

[AyG]

In short, yes.

You have to pay UK income tax on all your UK income, even if you're non-resident. You do, however, still get your UK tax allowance so, if, you're lucky, there may be no tax to pay.

[AyG]

It might be to your benefit to remortgage the property. You can then offset your mortgage payments against the income, reducing your tax liability. You can then send the sum raised by the remortgage offshore, outside the clutches of HMRC.

[tomhuayyai]

It might be to your benefit to remortgage the property. You can then offset your mortgage payments against the income, reducing your tax liability. You can then send the sum raised by the remortgage offshore, outside the clutches of HMRC.

Thanks for that - interesting. I must think about this and look into a re-mortgage.

Thanks

[rgs2001uk]

The following link may be of help,

http://www.hmrc.gov.uk/CNR/nr_landlords.htm

[Beetlejuice]

In short, yes.

You have to pay UK income tax on all your UK income, even if you're non-resident. You do, however, still get your UK tax allowance so, if, you're lucky, there may be no tax to pay.

Exactly.

Sorry, there is no escape from the dreaded taxman.

[Ricardo]

Yes, you would need to pay UK Income-Tax (after all ... the income arises within the UK), if the commercial-rent (less any allowable-costs like agents' fees or repairs) were high enough, but you would get your full personal tax-allowance to off-set against the income.

Perhaps consider selling the property, moving the capital offshore (outside the EEC ?), and then investing it in a commercial-property fund, to produce a (UK/EEC) tax-free income ?

[tomhuayyai]

The following link may be of help,

http://www.hmrc.gov....r_landlords.htm

Thank you so much for this

Quickly scanned it - says tax may not be payable with the right forms etc, but does not say if it applies to commercial property as well or residential only (as I think).

[tomhuayyai]

Yes, you would need to pay UK Income-Tax (after all ... the income arises within the UK), if the commercial-rent (less any allowable-costs like agents' fees or repairs) were high enough, but you would get your full personal tax-allowance to off-set against the income.

Perhaps consider selling the property, moving the capital offshore (outside the EEC ?), and then investing it in a commercial-property fund, to produce a (UK/EEC) tax-free income ?

Thank you.

There are many ways to not pay tax such as this BUT I really dont want to sell the property.

Tom

[tomhuayyai]

In short, yes.

You have to pay UK income tax on all your UK income, even if you're non-resident. You do, however, still get your UK tax allowance so, if, you're lucky, there may be no tax to pay.

Exactly.

Sorry, there is no escape from the dreaded taxman.

I think getting better at off setting expemses might be a good plan.

I wonder if I can off set the cost of a flight home to 'inspect' the premises periodically???!!!!!

Kinda doubt it. It always seems that its 'other' people who get away with not paying tax

[robblok]

Call me stupid but i don't get the remortgaging thing.

Before you get say 5000 pounds a year and pay (i dont know UK tax system) 2500 (say 50%)

Then you remortgage and you pay 5000 mortgage (interest part) and you receive 5000 so you dont have any money that you have left as a profit. So you dont pay tax.. good.. but you also dont have a profit. In scenario 1 you still had 2500 left is better as nothing.

Only thing you got now is that you have a lumpsum that you have to pay back once. So you freed up some money but you dont have an income anymore. What is the wisdom in this.

Its ok not to pay taxes but if you sacrifice your income for it does not sound right to me.

[Darrel]

says tax may not be payable with the right forms etc,

I think you will find that it refers to withholding tax, not tax.

Your tenant (or agent) is supposed to withold the tax on the rental payment, unless you have filled in the right forms.

Either way, you will be taxed on the income minus your personal allowance.

[StreetCowboy]

Call me stupid but i don't get the remortgaging thing.

Before you get say 5000 pounds a year and pay (i dont know UK tax system) 2500 (say 50%)

Then you remortgage and you pay 5000 mortgage (interest part) and you receive 5000 so you dont have any money that you have left as a profit. So you dont pay tax.. good.. but you also dont have a profit. In scenario 1 you still had 2500 left is better as nothing.

Only thing you got now is that you have a lumpsum that you have to pay back once. So you freed up some money but you dont have an income anymore. What is the wisdom in this.

Its ok not to pay taxes but if you sacrifice your income for it does not sound right to me.

Then you invest the offshore to earn tax-free interest which hopefully exceeds the 2500 after-tax income.

I think that, were it not for double-taxation agreements, the rental income might be taxable in Thailand as well, and the offshore interest would almost certainly be taxable in Thailand. Of course, many of our fellows are quite relaxed about evading tax in Thailand. The tax man generally is not bothered what bank branch holds your savings; he wants his share of interest accrued to all his tax payers.

SC

[StreetCowboy]

Out of interest, does Johnny Foreigner get a tax allowance to offset against his rental income in the UK as well?

How does that work for property held in joint names? For example, does each foreigner get a separate tax allowance?

I've never felt it appropriate to bother the tax man with such questions - it would merely cause him anxiety and stress...

SC

[meatboy]

my thai wife has property in the uk and fills a tax return form every year,as it is the only income she has [personal allow.£7000] its under the threshold so doesnt pay any,depending on your age if its the only income you have,you have not reached pension age so you have to pay 20%tax up to£37500 after that you come into thai saying too much money.

[robblok]

Call me stupid but i don't get the remortgaging thing.

Before you get say 5000 pounds a year and pay (i dont know UK tax system) 2500 (say 50%)

Then you remortgage and you pay 5000 mortgage (interest part) and you receive 5000 so you dont have any money that you have left as a profit. So you dont pay tax.. good.. but you also dont have a profit. In scenario 1 you still had 2500 left is better as nothing.

Only thing you got now is that you have a lumpsum that you have to pay back once. So you freed up some money but you dont have an income anymore. What is the wisdom in this.

Its ok not to pay taxes but if you sacrifice your income for it does not sound right to me.

Then you invest the offshore to earn tax-free interest which hopefully exceeds the 2500 after-tax income.

I think that, were it not for double-taxation agreements, the rental income might be taxable in Thailand as well, and the offshore interest would almost certainly be taxable in Thailand. Of course, many of our fellows are quite relaxed about evading tax in Thailand. The tax man generally is not bothered what bank branch holds your savings; he wants his share of interest accrued to all his tax payers.

SC

Sure but it only makes sense if you have a plan for tax free intrests and it exceeds it. I am an accountant and many times my clients want to ad costs so they have to pay less tax.

I always tell them that you loose all your money on costs and only have to pay 37% of tax. SO you have more left. (if the costs have a greater benefit then ok make them. But dont make cost just for the sake of paying less taxes)

[tomhuayyai]

Thank you everyone.

Some interesting points and some thought provoking ones too.

In my mind, I think I have been confusing witholding tax and not paying tax. Clearly two very different things.

How much difference is the picture if I have reached state retiremnt age? Apart from having the small state pension, this is my only retirement plan, so to speak.

Thanks again to you all.

[jimbeam1]

Call me stupid but i don't get the remortgaging thing.

Before you get say 5000 pounds a year and pay (i dont know UK tax system) 2500 (say 50%)

Then you remortgage and you pay 5000 mortgage (interest part) and you receive 5000 so you dont have any money that you have left as a profit. So you dont pay tax.. good.. but you also dont have a profit. In scenario 1 you still had 2500 left is better as nothing.

Only thing you got now is that you have a lumpsum that you have to pay back once. So you freed up some money but you dont have an income anymore. What is the wisdom in this.

Its ok not to pay taxes but if you sacrifice your income for it does not sound right to me.

Then you invest the offshore to earn tax-free interest which hopefully exceeds the 2500 after-tax income.

I think that, were it not for double-taxation agreements, the rental income might be taxable in Thailand as well, and the offshore interest would almost certainly be taxable in Thailand. Of course, many of our fellows are quite relaxed about evading tax in Thailand. The tax man generally is not bothered what bank branch holds your savings; he wants his share of interest accrued to all his tax payers.

SC

Surely you would also have to pay charges for your offshore account? If you have less than £25,000 pound invested with them?

jb1

[meatboy]

Thank you everyone.

Some interesting points and some thought provoking ones too.

In my mind, I think I have been confusing witholding tax and not paying tax. Clearly two very different things.

How much difference is the picture if I have reached state retiremnt age? Apart from having the small state pension, this is my only retirement plan, so to speak.

Thanks again to you all.

if you reach retirement age your tax free income goes up to just under £10000,and dont forget isas are tax free,so if you cant live on £200 a week in thailand find a thai wife.

[tomhuayyai]

Thank you everyone.

Some interesting points and some thought provoking ones too.

In my mind, I think I have been confusing witholding tax and not paying tax. Clearly two very different things.

How much difference is the picture if I have reached state retiremnt age? Apart from having the small state pension, this is my only retirement plan, so to speak.

Thanks again to you all.

if you reach retirement age your tax free income goes up to just under £10000,and dont forget isas are tax free,so if you cant live on £200 a week in thailand find a thai wife.

Thanks one and all. Very helpful