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Personal allowance for non-residents

 

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Personal Allowance for Non-residentsTypically, a non-UK resident will only be taxable on UK rental profits.  A generous tax relief available for a UK landlord is the personal allowance.  However, not all non-residents will be entitled to it.

British and EEA nationals

Double tax treaty

Not entitled to a UK personal allowance

Resident but not national within the EEA

Summary

 

British and EEA nationals

 

A national of the Britain or the EEA area is entitled to a UK personal allowance.  Generally, a British passport holder or citizen is regarded as a national for tax purposes.

 

Double tax treaty

 

The Double Tax treaty of most countries will entitle many other people to a UK personal allowance.  A list of tax treaties can be read here: Digest_of_Double_Taxation_Treaties.

 

Most commonly a person will be entitled to the allowance if N and R.  This means that the personal allowance is available to individuals who are both a national and a resident of the territory.  However often, it is only a requirement to be resident.  This is designated by the symbol R.

 

Not entitled to a UK personal allowance

 

The two largest economies, USA and China, are both notable exceptions. Where the Digest indicates “no”, only a resident of that country who is a UK or EEA national will be entitled to the allowance.  A “no” is designated to many other countries in Africa, South America and the Middle East:  Saudi Arabia, Mexico being two of the larger examples.  The list of “nos” includes many British Overseas Territories, such as the Cayman and British Virgin Islands.  Residents of other low tax jurisdictions such as Qatar, Brunei, Bahrain and Hong Kong are also barred from the UK allowance.

 

Resident but not national within the EEA

 

The Double Tax treaty Digest explains that EEA citizens (i.e. nationals) are entitled to the UK Personal Allowance.  However, some individuals may be resident of an EEA country without being a citizen.  In this case, it will be necessary to check through the country listing to see whether the Double Tax Agreement permits a UK personal allowance.  An allowance would not, for instance, be available to a resident of Sweden, Spain, Poland, Norway, Liechtenstein, Iceland, Hungary, Greece, Germany, Crotia, Bulgaria, unless the individual is also a national of an EEA country.

 

Summary

 

The determinants of UK personal allowance entitlement can be complex and are prone to change.  It is worth checking the digest and this manual to confirm whether the UK allowance is applicable.  Two people with apparently similar circumstance may have different eligibility.

 

Comments  

#46 Ray Coman, FCCA, CTA 2020-10-03 19:06
Dear Will,

You have mentioned that your wife is a British citizen. If she also a British passport holder, she will be entitled to a UK personal allowance.

The form R43 is used to claim personal allowances if you wife is not resident in the UK. However, as a non-resident landlord she is required to file a Tax Return. That Tax return (refrred to as SA100) would include residency pages (referred to as SA109.) The basis of her claim for personal allowance would be stated on those Tax Return (SA109) pages. Therefore it is not necessary to also send in a form R43. Based on what I understand from your explanation, her only UK income is from rental income and those rental profits are less than the personal allowance. On that basis, she would not have a UK tax liability.
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#45 Will 2020-10-02 13:28
Dear Ray,
Thanks for your helpful site! My partner is a British citizen but has been resident in Hong Kong for 3 years. She has completed the self-assessment form each year and declared rental income on a Uk property. The amount is well under personal allowance. This year, for the first time, she has been charged nearly 2000gbp in tax. Tax not deducted at source - she has NRL1 approval. I assume this is to do with the SA109 form? Will she now need to complete and return form R43? I assume the 2000 will need to be paid upfront and then reclaimed? Thanks very much.
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#44 Ray Coman, FCCA, 2020-06-26 09:39
Dear Chan,

Tick box 1 and box 16 of the S109. https://assets.publishing.service.gov.uk/government
/uploads/system/uploads/attachment_data/file/872779/
SA109_English_Form.pdf

Mostly Tax Returns are filed online, so answer the online questionnaire accordingly. The PDF above is for illustrative purposes only.
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#43 Ray Coman, FCCA, 2020-06-26 09:35
Johnny, A BNO (British National Overseas) passport holder has the same entitlement as a British passport holder to the UK personal allowance. My explanation about residents of low tax jurisdictions not being eligible to the UK personal allowance applies if those individuals do not also hold EU citizenship.
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#42 Ray Coman, FCCA, 2020-06-26 09:08
Dear Matthew,

The personal allowance for non-residents is abated once total income exceeds £100,000, just as it does for UK residents. However, there are typically only two types of income which are subject to UK tax: rental income and employment earnings where your work benefits the UK entity. If your employer is not resident in the UK and you have not had UK PAYE tax deducted from your pay, this is a strong indication that the employment earnings will not be taxable. Further information can be read here: https://comanandco.co.uk/hiring-a-uk-worker-from-overseas

Investment income (such as dividend and interest) and non-UK employment income is disregarded. Therefore, if your income is not rental income is is unlikely that it will count towards the personal allowance abatement threshold.
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#41 Matthew 2020-06-17 08:59
Hello,

I am a UK national resident for 30 years in Poland. I have rental income from a property which my wife and I own in London. As both my wife and I earn more than £100 000 pa are we eligible for Personal Allowances? I would add that our earning are from work outside the UK and our UK sourced revenue is only from rental income from one flat and well below 30 000 in total pa.
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#40 Johnny 2020-05-04 16:49
I’m a Hong Kong permanent residence & only holding a BNO passport. I’ve brought a commercial unit in UK last Aug. & receiving income on that, am I actually entitled to personal allowance. In your notes above under “Not entitled to a UK personal allowance........ - Residents of other low tax jurisdictions such as Qatar, Brunei, Bahrain and Hong Kong are also barred from the UK allowance.“ I’m a bit confused here, am I still eligible for the PA, please advise, many thanks.
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#39 Chan 2020-05-04 10:48
Hi there, I got a BNO and has a job in HK. I am going to file in SA100 and SA105, SA109. How can I get the personal allowance?
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#38 Ray Coman, FCCA, CTA 2020-03-09 12:30
Dear Mary,

On the SA109 supplement to the tax return you should tick box box 16. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/786916/sa109_notes_2019.pdf

I cannot advise on how this works if you are using the HMRC online tools or a third party software to file your Returns.

You are still within four years of the end of the relevant tax years, (i.e. before 5 April 2021 for 2016/17.) Therefore you would need to make a claim for over payment relief. This claim would include a copy of your passport as proof of nationality (or old passport if it expired in any of the related years.) More information can be found here: https://www.gov.uk/hmrc-internal-manuals/self-assessment-claims-manual/sacm12005
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#37 Mary 2020-03-09 12:13
I am a British citizen with UK passport resident in the BVI. I have income from a property rental in the UK, and have joined the non-resident landlord scheme. For the past 3 years I have paid tax on the income as I mistakenly did not tick box 16 on the SA 109s. Can I reclaim the tax, and if so how would I go about this? Thank you
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#36 Ray Coman, FCCA, CTA 2020-03-08 09:54
Dear Abdelkader,

As you will see from the link below as you are both resident and national of Egypt, you are entitled to a UK personal allowance. This is under the terms of the double tax treaty.
https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm10340

I have sent you a message privately, if you would like me to deal with HMRC on your behalf to try and resolve the matter.

It is likely to do with entries on your Tax Return.
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#35 Abdelkader 2020-03-08 09:27
Hi,

My name is Abdelkader.

I am Resident / National of Egypt.

I bought my first property in UK in 2015 and another one is 2016.

In in 2017 my first property became Joint ownership with my spouse.

In 2018, my second property became Joint ownership with my spouse also.

I have been sending tax returns since 2015.

Every year I was told by HMRC that my income is too low to pay taxes.

In 2019 I noticed that I have been answering question 8 on SA100 wrong since I am not UK national nor UK resident.

I contacted HMRC yesterday and I was told that I must pay £2,697!
I was also told that I can apply for allowance.
My spouse was told that she must pay £436!

I want to know if I am subject to allowance or how can reduce (or eliminate) my/my spouse tax bills (£2,697 + £436).

Thanks
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#34 Ray Coman, FCCA, CTA 2020-02-19 10:30
Trevor,

As per the following HMRC article, you get a UK personal allowance if you are a British passport holder:
https://www.gov.uk/tax-uk-income-live-abroad/personal-allowance
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#33 Trevor Kearsley 2020-02-19 09:31
I am a resident in Egypt and have been for the last 6 years although I am a British Passport holder. I have a rental property in the UK which I have been paying tax on. Am I eligible for the personal allowance?
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#32 Ray Coman, FCCA 2019-11-20 14:44
Frank,To quote the HMRC guidance: "If you’re not a UK resident, you don’t usually pay UK tax on your pension"https://www.gov.uk/tax-on-pension/tax-when -you-live-abroad
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#31 Frank Burke 2019-11-20 13:28
Hi I'm an oversees landlord residing in the Rep of Ireland and along with my wife we rent a single property in the UK. The profit earned is less than our entitled joint personal allowances and therefore no tax is due. I declare rental profit earned in a tax return made to the Irish tax authority. My wife (55) has recently cashed in a small UK pension (£17,000) which has been transferred to Ireland via QROPS.
Does this pension money need to be declared to HMRC? If it is added to annual rental profit it will exceed our joint personal allowance limit.
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#30 Ray Coman, FCCA, CTA 2019-10-03 10:01
Dear Kwan,

Prior to the handover, Hong Kong citizens could register as a British overseas national. A British overseas nation had the right to a passport and provided you hold a passport you would be entitled to the UK personal allowance.
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#29 Kwan 2019-10-03 09:21
I’m a BNO (British National Oversea) passport owner and living in HK. Am I entitled the UK personal allowance? Thanks.
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#28 Ray Coman, FCCA, CTA 2019-09-06 13:42
Dear Rosetta,

I advise that you and your husband is resident in the European Economic Area, therefore you both are entitled for a UK personal allowance on your UK rental Income.
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#27 Rosetta 2019-09-06 12:15
Hi,
I am resident in Germany and I have a rental income from a Uk property. Am I entitled the UK personal allowance? My husband on the other hand is the owner too of the same property, but resident in Italy? Is he entitled?
Thanks
Regards
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#26 Ray Coman, FCCA, CTA 2019-08-31 09:22
Dear James,

I advise that you are a UK National therefore, you are entitled to UK personal allowance on your rental income from your UK property.

You will need to check your Israeli tax position with a tax adviser in Israel. Probably the UK rental income will be treated as foreign income in Israel and exposed to local taxes. However, you would need to check the position in Israel as I can only advise on UK taxation.
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#25 James 2019-08-30 23:48
I’m a uk born uk passport holder & moved to israel in
August 2017
working as a hospital doctor employee earning a salary.

I became an israeli National with an israeli passport.
I consider myself a dual national & will one day return to
the uk.

I intend to buy a property in the uk & rent it.

As a new resident in israel(aliyah) I do not pay any israeli taxes on income derived in the uk.
I will pay uk taxes on income derived in the uk

Can I claim the personal allowance in each country
against the income derived in each country?
£12,500 in the uk & 2.25 points in israel.

Thanks
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#24 Ray Coman, FCCA, CTA 2019-06-22 11:12
Mark Ramsay,

If you are a UK national or EEA citizen you are entitled to a personal allowance. If you are not, the entitlement is determined by reference to the double tax treaty.

In that treaty a "no" means that you are not entitled regardless of your nationality. For instance, "no" means even if living in the country where you hold nationality, the allowance is unavailable.
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#23 Mark Ramsay 2019-06-22 10:05
Quoting Raphael Coman, FCCA, CTA:
As a British passport holder you are entitled to the UK personal allowance regardless of residence.


No that is NOT correct. Read the section Not entitled to a UK personal allowance that was written by yourselves!
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#22 Ray Coman, FCCA, CTA 2019-06-16 09:22
Dear Duncan,

As you are British, you will be entitled to the UK personal allowance.

Rental profits on property situated in the UK remain taxable in the UK regardless of where you are resident.

The consultancy income is not as straightforward. If you have a permanent establishment in the UK, you would be liable to UK tax:
https://comanandco.co.uk/hiring-a-uk-worker-from-overseas#Permanent_establishment
and here:
https://www.gov.uk/hmrc-internal-manuals/international-manual/intm264020
Based on your brief explanation, i could not offer an opinion and a public forum would probably not be a suitable place to discuss the matter.

I cannot advise on your liability to Cyprian tax. However, as a non-resident you would not be liable for any employment or trading income made outside the UK.
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#21 Duncan Woodside 2019-06-15 18:31
I am employed in a full time job in Cyprus, where I am now resident, and where the first EUR19,500 of my salary is tax free.
I am British.
I also have various earnings in the UK - some of it rental earnings from a property, but some arising from consultancy work carried out for UK firms - which taken together total not more than £12,000 each year. These UK earnings go into UK bank accounts. Am I (i) entitled to the full UK personal tax allowance on all of these UK earnings and (ii) are these UK earnings potentially liable for tax in Cyprus?
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#20 Ray Coman, FCCA, CTA 2019-01-31 09:04
Ross,

If you do not have a British passport or Spanish citizenship you would not be entitled to the personal allowance.

On a separate note, ensure you consider your entitlement to Principal Private Residence relief when you dispose of your property.
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#19 Ross Stephenson 2019-01-30 18:34
I have Australian passport and rent the flat I own in London having lived in the UK for 27 Years. Now I live /work in Spain - am I entitled to any personal allowance?
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#18 Ray Coman, FCCA, CTA 2019-01-22 09:01
Dear Mart,

Certain Hong Kong citizens were able to obtain British overseas nationality before the changeover and are therefore entitled to a UK personal allowance. If you have a British passport you can claim the allowance, however a UK allowance is not available if you only have Chinese nationality.
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#17 Mart 2019-01-21 21:06
Is the personal allowance still available for a UK national permanently resident in HK to offsett against rental income
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#16 Ray Coman, FCCA, CTA 2019-01-19 09:17
Dear JG,

I cannot advise on the Andica, or any other software, including HMRC online tools. However, the source document is referred to as the SA109. It is the Residence supplement to the SA100 form (a.k.a Tax Return.) The supplement notes can be located here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/786916/sa109_notes_2019.pdf

Since you are UK national you would tick box 16 and not box 15.

Your personal allowance should be applied. You do not need to complete a for R43. If the personal allowance has been applied there should be no need to reclaim tax on the basis of rental income alone.

If you require assistance with making a claim for over payment relief for any of the previous four tax year, send me a message directly and I will try to assist.
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#15 JG 2019-01-18 18:47
Thanks. I am a British National living in USA, submitting my SA100 using Andica software and my personal allowance is not being applied, so it is showing that I need to pay tax even though my UK rental income is only a few 1000. Is this correct? Do I need to fill in form R43? And if so, do I pay the tax and then claim it back?
I wasn't expecting to have to pay any tax, but now wondering if I'm missing something.

Quoting Ray Coman, FCCA, CTA:
Yes, as a British National, you are entitled to a UK personal allowance
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#14 Ray Coman, FCCA, CTA 2019-01-10 09:38
Dear Cong,

You would not be entitled to the UK allowance unless you are a British or EEA National.
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#13 Cong 2019-01-09 23:20
I am Chinese citizen and live in China all the time. I have rental income from property in UK, do I entitle to UK personal allowance? Thanks very much
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#12 Ray Coman, FCCA, CTA 2018-12-14 19:31
Dear Muhmmad,

Provided having British nationality can be proven by way of a passport you would be entitled to the personal allowance.

You could be getting 20% tax withheld at source because you have not yet joined the non-resident landlords' scheme. The letting agent or accountant should be able to assist with joining the non-resident landlord scheme.
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#11 muhmmad 2018-12-14 19:19
Dear sir, I am a British national planning to move to Qatar for few years. I would have rental income from my house in the UK. will I have personal allowance. I was told by someone on phone i would not and will pay tax @ 20% on all income from the UK being in Qatar does not matter if I am British national? will be grateful for your help. regards
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#10 Ray Coman, FCCA, CTA 2018-11-26 15:47
Dear Katre,

As a national of the UK, you are entitled to a personal allowance.
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#9 Katre 2018-11-26 15:11
Hi,
I am a non - resident British passport holder; dual British/Turkish, living in Turkey with a property I rent out in the UK. Am I entitled to a personal allowance?
Thank you
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#8 Ray Coman, FCCA, CTA 2018-11-02 13:46
Dear Zhang,

Your friend will not be entitled to a personal allowance unless he or she is also a British passport holder or an EEA citizen.
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#7 Zhang 2018-11-02 12:41
Hi, my friend is Chinese national and lives in China, but owns property in UK. Is he entitled to the PA?
Many thanks
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#6 Ray Coman, FCCA, CTA 2018-10-22 10:47
Yes, as a British National, you are entitled to a UK personal allowance
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#5 Wai 2018-10-21 16:47
I’m a BNO (British National Oversea) passport owner and living in HK. Am I entitled the UK personal allowance? Thanks.
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#4 Ray Coman, FCCA, CTA 2018-10-11 13:32
Sean, as an Irish and therefore EEA national, you are entitled to the UK personal allowance regardless of where you are resident. Your wife would probably not be entitled, because Qatar does not grant its nationals a UK personal allowance.
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#3 Sean Mc Crudden 2018-10-11 13:31
Sean, as an Irish and therefore EEA national, you are entitled to the UK personal allowance regardless of where you are resident. Your wife would probably not be entitled, because Qatar does not grant its nationals a UK personal allowance.
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#2 Raphael Coman, FCCA, CTA 2018-10-11 10:24
As a British passport holder you are entitled to the UK personal allowance regardless of residence.
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#1 Yao 2018-07-11 19:29
Hi there
I am Chinese with British passport, I moved to South Africa in 2011. I have some rental income from UK. Am I entitled the UK personal allowance? Thanks
Regards
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