Tax implications on buy to let property

Many expats rent out their UK home, while they are abroad for work reasons or having settled abroad for good. Keeping your UK property will give you a peace of mind you are still on the property ladder when returning to the UK, to provide income, and it also makes it easier to obtain further mortgages later on.

It can be tempting to cut out the agencies, find tenants and manage the maintenance and rent collection yourself from abroad though it would be exhausting. Not being able to oversee the procedure. How can you make your property more attractive to tenants?

The drawback is that dealing with tenants and maintenance issues directly can be stressful and time-consuming.

It’s an even bigger hassle if you happen to live in a different time zone. How can you make long-distance property management work for you?
In addition, when tenants move out, inventories must be carried out, repairs are done and the return of the deposit negotiated. What is the importance of check-in inventory?
“Having to manage contractors from a distance is tricky and time-consuming, and your visits to the property itself to check on the tenants and the property will be very limited.”

You can ask friends to keep an eye on your property and use online agencies, this will become frustrated over time though and likely restrain your relationship with friends and family. Find out if you need a property manager
You need to pay tax on your rental income if you rent out a property in the UK.
You may also need to pay tax if you make again when you sell residential property in the UK.

If you live abroad for 6 months or more per year, you’re classed as a ‘non-resident landlord’ by HM Revenue and Customs (HMRC) – even if you’re a UK resident for tax purposes.

How you pay tax

You can get your rent either:

• in full and pay tax through Self-Assessment – if HMRC allows you to do this
• with tax already deducted by your letting agent or tenant
• Get your rent in full
• If you want to pay tax on your rental income through Self-Assessment, fill in form NRL1i and send it back to HMRC.
• If your application is approved, HMRC will tell your letting agent or tenant not to deduct tax from your rent and you’ll need to declare your income in your Self-Assessment tax return.
• HMRC will not approve your application if your taxes aren’t up to date, eg you’re late with your tax returns or payments.
Get your rent with tax deducted
Your letting agent or tenant will:
• deduct basic rate tax from your rent (after allowing for any expenses they’ve paid)
• give you a certificate at the end of the tax year saying how much tax they’ve deducted
If you don’t have a letting agent and your tenant pays you more than £100 a week in rent, they’ll deduct the tax from their rent payments to you.

So you have many options.

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