Rental income from a property situated in the UK must be declared on an annual UK self-assessment tax return, even if the owner lives abroad.
You may also need to pay tax if you make a gain when you sell residential property in the UK.
In addition, a taxpayer disposing of UK residential property is required to inform HMRC within 30 days of the property being conveyed that the disposal has occurred.
UK Statutory Residence Test
In order to determine the individual’s residency position, the ‘Statutory Residence Test’ is applied. Under this test, you are considered resident for UK tax purposes if you spend 183 days or more in the UK in a given tax year. The following non-exhaustive list of factors can also affect your UK residency position:
- Where your main home is located
- If you have a home in the UK
- If you are working in the UK or abroad
- If you have family and other ties to the UK
Non-Resident Landlords Scheme
The Non-Resident Landlords Scheme is a scheme used for taxing the UK rental income of persons whose usual place of abode is outside the UK, commonly referred to as ‘non-resident landlords’.
Non-resident landlords can off-set the tax deducted from their UK rental income under the Non-Resident Landlords Scheme against their own tax bill when they complete their UK self-assessment tax return. They can also claim repayment of any excess tax deducted from their UK rental income. Your PTI Account Manager can guide you through the process.
Non-resident landlords can also apply to HMRC to have their rental income received gross. Broadly speaking, the criteria are as follows:
- UK tax affairs must be up to date
- They do not have any other UK tax filing obligations
- They do not expect to be liable for any UK income tax for the year in which they apply.
It should be noted that where a non-resident landlord has successfully applied to receive the rental income gross, it does not mean that the income is exempt from UK tax; it remains taxable and a tax return must be filed for each tax year in which they receive UK rental income.