UK Personal Allowance for non-residents
Written by Ray Coman
A non-resident is only liable to UK tax on income arising in the UK. The most common example of UK arising income is rental profits and UK employment earnings. Savings and investment income is disregarded for tax purposes.
Entitlement to the UK personal allowance will exempt rental profits below the annual limit. Where profits exceed the allowance, it is only excess which would be taxable.
The UK
National and resident
The European Economic Area (EEA)
EEA countries listed
Residence only
National only
No entitlement to allowance
Double Tax Treaty Digest Table
Hong Kong
A "British National Overseas" was a type of nationality open to Hong Kong residents about the time of the handover. A BNO is not entitled to a personal allowance. It is a source of common confusion, because the HMRC guidance states that a British passport holder is entitled to the personal allowance. A BNO is a British passport holder. However, the Income Tax Act 2007, section 56 states that a personal allowance is available to an EEA national. A British Overseas National is not recognised by the European Union as having British Nationality. The HMRC guidance on being a passport holder is confusing. The position is that a BNO is not eligible to a personal allowance.
The UK
A person who is resident in the UK is entitled to a personal allowance regardless of their nationality. Loss of personal allowance occurs where income exceeds £100,000 and for people claiming the remittance basis as the personal allowance summary explains.
A person who is UK national can obtain the UK allowance wherever resident. This is the same as for EEA nationals (see below.)
The effect of UK nationality for this purpose is extended to certain crown employees such as: diplomats, civil servants and members of HM Armed forces.
National and resident
Most major countries in the world grant a UK personal allowance to their residents only if that person also holds nationality of that country. For instance, a person living in Argentina, with only Australian nationality would not be entitled to a UK personal allowance. Only people with Argentinian nationality would be eligible. In the Table below N&R signifies this status.
The European Economic Area (EEA)
An exception to the N&R rule explained above applies within the EEA. A person who is national and resident of an EEA country is entitled to the UK personal allowance regardless of where they are resident. Therefore, if an EEA country in the Table below has No or just N or just R, this applies only to individuals who are not EEA National.
EEA countries listed
Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the UK.
Switzerland is not in the EEA.
Residence only
Most countries require that an individual is both national and resident to be granted a UK personal allowance. However, some countries require only that the person is resident. For instance, Kenya require only that you are Kenyan resident to claim the UK allowance; nationality is not considered. These countries are denoted in the Table below by R.
National only
Other countries require that you are only National of the country. The place where a person resides does not affect eligibility. For Instance, Israelis anywhere in the world can claim a UK personal allowance. The letter N next a country in the table below indicates that the above applies.
No entitlement to allowance
As the table below illustrates, eligibility to the UK personal allowance varies according to country. Some countries do not allow their residents a UK personal allowance. This includes the USA and China and many low tax jurisdictions. Countries in the list below with a No allow their residents no entitlement to the UK personal allowance.
Most of the major populated counties are listed in the table below. However, if a country does not appear it is unlikely that their residents would be able to claim the UK personal allowance:
Double Tax Treaty Digest Table
|
Country |
Relief |
|
Albania |
No |
|
Algeria |
No |
|
Antigua & Barbuda |
No |
|
Argentina |
(N&R) |
|
Armenia |
No |
|
Australia |
(N&R) |
|
Austria |
(N&R) |
|
Azerbaijan |
(N&R) |
|
Bahrain |
No |
|
Bangladesh |
(N&R) |
|
Barbados |
(R) |
|
Belarus |
(N&R) |
|
Belgium |
(N&R) |
|
Belize |
No |
|
Bolivia |
(N&R) |
|
Bosnia - Herzegovina |
(N&R) |
|
Botswana |
(N&R) |
|
Brunei |
No |
|
Bulgaria |
(N&R) |
|
Burma |
(R) |
|
Canada |
(N&R) |
|
Cayman Islands |
No |
|
Chile |
No |
|
China |
No |
|
Croatia* |
(N&R) |
|
Cyprus* |
(N&R) |
|
Czech Republic* |
(N&R) |
|
Denmark* |
(N&R) |
|
Egypt |
(N&R) |
|
Estonia* |
(N&R) |
|
Ethiopia |
No |
|
Faroes |
No |
|
Fiji |
(R) |
|
Finland* |
(N&R) |
|
France* |
(N&R) |
|
Gambia |
(N&R) |
|
Georgia |
No |
|
Germany* |
(N&R) |
|
Greece* |
(N&R) |
|
Grenada |
No |
|
Hungary* |
(N&R) |
|
Iceland* |
(R) |
|
India |
(N&R) |
|
Indonesia |
(N&R) |
|
Ireland* |
(N&R) |
|
Israel |
(N) |
|
Italy* |
(N&R) |
|
Jamaica |
(N) |
|
Japan |
(N&R) |
|
Jordan |
(N&R) |
|
Kosovo |
No |
|
Kazakhstan |
(N&R) |
|
Kenya |
(R) |
|
Korea |
(N&R) |
|
Latvia* |
(N&R) |
|
Lesotho |
(N&R) |
|
Libya |
No |
|
Liechtenstein* |
(R) |
|
Lithuania* |
(N&R) |
|
Luxembourg * |
(N&R) |
|
Macedonia |
No |
|
Malaysia |
(N&R) |
|
Malta* |
(N&R) |
|
Mauritius |
(R) |
|
Mexico |
No |
|
Moldovia |
No |
|
Montenegro |
(N&R) |
|
Morocco |
(N&R) |
|
Namibia |
(R) |
|
Netherlands* |
(N&R) |
|
New Zealand |
(N&R) |
|
Nigeria |
(N&R) |
|
Norway* |
(N&R) |
|
Oman |
(N&R) |
|
Pakistan |
(N&R) |
|
Panama |
No |
|
Papa New Guinea |
(N&R) |
|
Philippines |
(N&R) |
|
Poland* |
(R) |
|
Portugal* |
(N&R) |
|
Qatar |
No |
|
Romania* |
(N&R) |
|
Russian Federation |
(N&R) |
|
Saint Christopher (St. Kitts & Nevis) |
No |
|
Saudi Arabia |
No |
|
Serbia |
(N&R) |
|
Senegal |
No |
|
Sierra Leone |
No |
|
Singapore |
No |
|
Slovakia* |
(N&R) |
|
Slovenia* |
(N&R) |
|
Solomon Islands |
No |
|
South Africa |
(N&R) |
|
Spain* |
(R) |
|
Sri Lanka |
(N&R) |
|
Sudan |
(N&R) |
|
Swaziland |
(R) |
|
Sweden* |
(R) |
|
Switzerland |
(N&R) |
|
Taiwan |
(N&R) |
|
Tajikistan |
No |
|
Thailand |
(N&R) |
|
Trinidad and Tobago |
(N&R) |
|
Tunisia |
(N&R) |
|
Turkey |
(N&R) |
|
Turkmenistan |
(N&R) |
|
Tuvalu |
No |
|
Uganda |
(N&R) |
|
Ukraine |
(N&R) |
|
United Arab Emirates |
No |
|
United Kingdom* |
(Yes) |
|
Uruguay |
No |
|
USA |
No |
|
Uzbekistan |
(N&R) |
|
Venezuela |
(N&R) |
|
Vietnam |
(N&R) |
|
Zambia |
No |
|
Zimbabwe |
(N&R) |
*EEA countries
Comments
According to the gov.uk website you do not need to do a self-assessment if savings and investment income is under £10,000 and there is no tax to pay. The personal allowance is £12,570, so since you have not written exactly how much investment income there is a possibility that you would need to file a Return if your income is over £10k.
Since you have Canadian residency and nationality, you would be entitled to the UK personal allowance. You would select box 15 please.
As a British passport holder (and therefore British national) you are entitled to the personal allowance and the tax calc program has therefore been correctly allocating personal allowance in the calculation of taxable UK rental profits
The SA109 notes which are online can be a helpful guide. These include the three letter codes for each country. For Netherlands the country code is NLD.
Boxes 18-19 concern obtaining tax relief on foreign income. It is rare that a non-UK resident will be claiming double tax relief. this is because rental income is taxed first in the country in which it arises Country of origin- which in this case is the UK) and second in the country of destination, in this case the Netherlands. So those boxes will probably be left blank.
Domicile and remittance basis is unlikely to be relevant either in your case as a UK property owner is subject to capital gains tax regardless of domicile.
I have dual nationality with UK and the Netherlands.I left G.B in 1984 to settle in Holland.
I am required to return a SA109 this year, but am confused to which boxes I must tick. Obviously box 1 and 16 , but which land codes in box 17 ?
The residence and domicile boxes I don't understand.
Thank you very much ,
Susan.
Since France is in the EEA, if you have French citizenship (or citizenship elsewhere in the EEA) you would have eligibility for the UK personal allowance. If you were not a citizen you would not be entitled to the UK personal allowance even if you spent most of your time in France.
An R43 is for claiming a refund. As non-UK resident landlords you would both be required to file a Tax Return. If you have had too much tax withheld at source (for instance by your letting agent because you have not joined the non-resident landlord scheme) the overpayment of tax would be refunded by making the appropriate claim on your Tax Return/s.
The SA109 is the residency supplement, and should be sent to HMRC with the main SA100 Tax Return.
Most Tax Returns are now completed electronically, for instance using the HMRC software.
You should firstly state that you are not resident. Unless you departed the UK in the tax year in question, you can ignore the split year treatment section.
Most of the rest of the first section concerns the number of ties that you had to the UK. If you are physically present the considerable majority of the time, you can ignore the ties section. However further information on the residency test can be read by searching for the report on this website.
You are claiming the personal allowance on the basis that you are a British citizen or national of another EEA country and should therefore select box 16 (and not box 15). British passport holders are usually able to select box 16.
On the basis that you are not liable to UK tax, it is not necessary to claim double tax relief. Unless your capital gains tax or inheritance tax is impacted in the related tax year, the section on domicile can be ignored.
The remittance basis applies to UK residents, and you can therefore ignore that part as well.
At the time of writing you will be entitled to UK personal allowance as a resident and national of an EEA country.
You have correctly identified that as a non-resident you are required to file a Tax Return even though there is no tax to pay.
By the same token, the penalty for late notification is a percentage of tax owed. If the tax is nil the penalty would be nil.
If you have received a notice to file a Tax Return, you would be liable to late filing penalties. Since HMRC address data can be out of date, you are exposed to the late filing penalties that have been sent to an old address.
HMRC have been known to use third party information to obtain details on landlords. I would therefore encourage you to register as soon as possible.
Thanks for this useful post!
I am a british citizen living in UK until around 7 years ago when I relocated to Sweden with new family.
The property in the UK which I own has been rented out during this period.
It was let through a management company up until maybe 2 years ago when I communicated with the tenant directly.
As I understand it I will be eligible for the UK personal allowance, which means that I will not have to pay tax on any profit below £12,500 ? my total rental income is £9000
That said I still need to complete self assessment form going forward ? and do I need to do that retrospectively considering it has never been more than the annual personal allowance.
Any input is very much appreciated
Thanks
Matthew
I am a UK national, living in France and have one rental property in the UK, the income is shared between myself and my husband and each share is below the tax threshold.
I am registered as an overseas landlord tax is not taken off the rental income by the managing agent.
I'm confused as to which parts of the form I need to complete - should I be claiming anything in box 20?
Are boxes 23 - 39 irrelevant?
Thanks
I am chinese but lived permanently in France, can I apply the personal allowance for my house rent income in UK?
In fact, the 45% of house belongs to my wife (French/EEA nationality without work, so no UK tax number), from reading the comments, she should be eligible, can she issue a tax R43 instead? For the tax rental submission, do we have to do it separatly (myself and my wife), or any possibility to do them together?
Many thanks for your help.
Best regards, Frank
Based on the information you have provided, the selections you intended to make on the residency questionnaire appear to be correct
Great information, thanks for all!
I think from the information in the post and from previous comments, it is clear what I need to fill. But it would be great to confirm.
My circumstances:
Spanish national. Moved to the UK in 2002, left in 2020.
I have a house in the UK that I am renting. Need to submit my self assessment.
I have been in Spain since 2020, started working in 2021 and I have a house.
This is the first year that I am presenting my self assessment as a non resident.
This is what I think I should do:
Tick box 1 - I am not resident in the UK for 21/22
Tick box 4 - I was resident in the UK for 20/21
Tick box 7 - I meet the third automatic overseas test
Tick box 9 - Home overseas for 21/22
Tick box 16 - I am Spanish national
Box 12 - Leave empty
Box 17, 18 - Use ESP only in both.
Box 19 - Leave empty, I was resident in the UK for 20/21
Ignore boxes - 20 - 22
Domicile:
Ignore boxes - 23 to 27
Remittance
Ignore boxes - 28 to 39
What do you think?
Thanks!
If you are UK tax resident, you will entitled to the UK personal allowance. Residency is determined by days of physical presence in the UK. From what you have explained it is highly likely that you will obtain your UK personal allowance regardless of nationality.
The exception to the above applies if you are not domiciled and claiming the remittance basis. You have to claim the remittance basis it does not apply automatically.
For every £2 that your income is over £100,000, £1 of personal allowance is abated.
I cannot advise on Irish taxes. You would need to seek the assistance of an Irish accountant or tax adviser. If recent UK tax enforcement is anything to go by, my guess is that enquiries about non-resident landlords are being stepped up. I would therefore encourage you to prioritise any enquiries into your exposure to local taxes.
It would seem that HMRC have not changed their position which is that a British National Overseas is not a British National. more information can be found via the following link: https://community.hmrc.gov.uk/customerforums/ifp/3ae79c4f-4404-eb11-b5d9-00155d9c7393
I would concur that you have highlighted an inconsistency in the regulation. You could consider appealing any HMRC decision via the tax tribunal. However this is a costly process with an outcome of changing HMRC interpretation remote
I recently moved to Ireland from the UK with my wife. Our UK property is rented out. I understand that no UK tax would be payable on the rental income as the total rental income is below our joint Personal Allowances of £12,500 each and we own the property together.
My question relates to whether or not tax is payable to Irish Revenue on the rental income or is this protected by the Double Taxation Agreement?
Thank you
There has since been an update on the Section 56 (3) of the Income Tax Act, where it says -
An individual meets the condition in this subsection if, at any time in the tax year, the individual—
[F2(za)is a [F3national of the United Kingdom or a] national of an EEA state,]
This has been changed since the UK left the EU.
Does it mean BNO holders are now entitled to a personal allowance, as one qualifies if one is a UK national OR an EEA national?
Since BNO is a form of UK nationality, as confirmed by the government website, surely BNOs are entitled to personal allowance now?
I have been posting on HMRC's forum, and please see the exchange of messages on https://community.hmrc.gov.uk/customerforums/pt/91d12d54-5da4-ec11-826f-00155d9c6f58#ca2abb3b-c9a9-ec11-9840-6045bd10072c
The HMRC seems quite stubborn and insistent that BNO aren't entitled, despite I kept repeating that the Income Tax Act Section 56 has since been updated. And they failed to explain why HMRC doesn't recognise BNO as UK nationals.
I am not aware that this wording change affects the interpretation that HMRC have previously adopted. To recap, this interpretation is that a BNO is not eligible for the personal allowance. However, I would interested to hear if you are aware to the contrary. Prima facia, there is nothing about the wording that implies a change of positoin
A person who is an EEA national (which includes Germany) can obtain the UK allowance wherever resident.
Sweden is a country within the European Economic Area. As an EEA citizen your daughter in law will get the Personal Allowance. Therefore, it is not necessary to rely on the provision of the double tax treaty. Put ‘X’ in box 16 of the SA109.
She knows that she needs the NRL1 form completed as they receive rent without tax deducted and they will sort things out through self assessment until the flat is sold. This situation of renting the UK home arose during Parental Leave in 2019 and was then followed by Covid 2020, during which time my daughter in law started working in Sweden. The flat will be sold this year.
You are entitled to the personal allowance.
Without knowing more of your personal circumstance, box 15.
If you hold either Pakistan or British nationality you should be entitled to the persona allowance under the terms of the double tax agreement. However, as your income is below the trading allowance of £1,000 it does not need to be reported in any case.
I bought a store pod (very silly decision) 7 years ago and have never received any income to date. The service/management charges are always in excess. And they will only transfer the income once the amount reaches £200.
However for this tax year, I'm getting a net income of £100. Am I eligible for the Personal Allowance under Double Tax Treaty? Or I'll have to pay tax on the £100.
I'm also a tax filer in Pakistan.
Kind Regards,
I used to live in the UK and atm I jointly own a property in the UK but living in Poland. Do I deduct the personal allowance from my UK property income? Do I do it through SA109 box 15 - I add that we currently work in Poland
If she is a citizen of a European Economic Area (EEA) country, she will qualify for the UK personal allowance. If it is only French residency and not French citizenship, she would not qualify for a UK personal allowance. This is because Russian nationals also need to be Russian residents to get the allowance.
She has UK rental income to report. Will she qualify for the UK personal Allowance?
Thank you.
In your circumstance, you are correct to select Box 16 rather than Box 15 of the SA109. The terms of the DTA can be ignored
Box 17 include GBR and country of residence (see the list here: https://www.iso.org/obp/ui/#search) Box 18 includes only country code of residence.
You don't need to file an R43 if you are also doing a Tax Return.
I cannot comment on HMRC verification process since this outside the scope of my remit. However, your Tax Return includes your national insurance number, and I expect HMRC links to HM Passport Office using the NI number. That is just an educated guess. It is a system of self-assessment, so you do not need to provide evidence on the Tax Return. You only need to provide evidence if your Return is subject to an HMRC enquiry.
Helpsheet 304 only applies if you have suffered UK tax which you have not.
If you wish you can avail my service for completing your Tax Return for which I would probably charge £200 plus VAT per year. I cannot state the Return would be any different from what you have prepared, but that is my service in any case.
I am a British Passport holder and UK non-resident for tax year 2019-20 and my UK income - mainly rental income - is well below the threshold of UK personal allowance. It will greatly help to get your confirmation or otherwise to my understanding of the Tax return situation I face for this Tax year. Your response is much appreciated.
1. In SA109 Box 16 (UK Passport justifies this) will be marked instead of Box 15 (DTAA even though my 'resident' country has a DTAA with UK but for "N&R - BOTH a NATIONAL & RESIDENT" under Personal Allowance which would prevent me from availing Per Allowance as I am not national of resident country.
2. Box 17 (SA109) will be Resident country & UK but box 18 would be only my 'resident' country and Box 19 (prev Tax year) will be UK.
I need not submit R43 but how will HMRC verify my being a British passport.
3. I do not need to submit Claim form of Helpsheet 304 (or 302)
This is the first time ever I would file as a Non-resident UK. Concern I have is SA109 itself (or SA100 & SA101) do not provide space for me to state the facts of my being a British Passport holder, so how will they complete the assessment. If they write to me (as they never email), it will take ages in these covid-19 times to reach me.
Many thanks. Much appreciated. Chris
You are therefore no relying on the terms of the double tax treaty but on the basis that you are an EU citizen. This can be confirmed here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/898279/sa109_English_Notes-2020.pdf see question 16. The answer to your query is therefore to check box 16 and not box 15.
Provided you hold Cyprian nationality, you would be entitled to the UK personal allowance. The N&R in the table above relates to National and Resident.
The P43 form does not need to be filed if you are filing a Tax return. As a non-resident landlord, you are required to prepare a Tax Return, and therefore you do not need to do an R43 as well.
I understand that I am eligible for the UK personal allowance (£12,500 per year). Besides the self assessment tax return (SA100, 105, 109 etc) do I also need to complete an R43 form in order to claim the personal allowance?
Thanking you in advance for your valuable advice.
Since state pension is paid without deduction of tax at source, the tax code is adjusted on your pension which is not state pension.
To prevent deduction of tax at source consider completing a 2020-21 PAYE Coding Notice query: https://www.tax.service.gov.uk/shortforms/form/P2
In the reason box, explain that you are non-resident and the state pension income should be disregarded. The tax code which provides for the 2020-21 basic personal allowance is 1,250L.
If this is not effective consider filing a Tax return each year. To the extent that you are subject to Thai tax on your UK pension income, you could obtain a credit against Thai tax for any UK tax suffered at source. Since I am not a Thai tax person I cannot advise, however that would be worth exploring. If you are liable to Thai tax on the difference, there is little point in filing a PAYE Notice Query form except to gain a minor cash flow advantage.
It is not always true that a UK state pension is not subject to income tax for a British citizen who is non-UK resident. I am a British citizen but not UK-resident (I live full time in Thailand) with a UK civil service pension which is obligatorily taxed ‘at source’ in the UK of course. I also receive the state pension gross but my tax-free allowance (and tax code) for my civil service pension is reduced by the same amount, so the practical effect is that income tax is paid indirectly on the state pension. OK, it is true that if I received only the state pension as my income it would be within my personal allowance so I would not be taxed on it.
Serbia is not currently part of the European Economic Area (EEA.) Therefore if you do not hold Serbian nationality and you are not a citizen of the EEA, you would not be entitled to the UK personal allowance.
Can you please let me know if a Serbian Resident (only resident) can claim UK Personal allowance.
Please refer to point 3 of post number 31. Broadly you will be entitled to the UK personal allowance.
Thank you for your useful information.
I'm holding Hong Kong SAR passport and BNO (British National OVERSEAS). I'm living in Hong Kong and i'm not working for British government.
Do i get a personal allowance for the residential rental income from my residential property in UK ?
Is BNO considered as a British passport regarding the personal tax allowance entitlement ?
Interesting question. As far as I am aware The Jersey Government only issues British passports to people who were born in Jersey or who have parents who live in Jersey. This is outside of my remit. However, my understanding is that a Jersey passport is not automatically a British passport.
The question then turns to whether you are entitled to a personal allowance under the terms of the double tax treaty.
I cannot find Monaco in the HMRC Digest.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/710099/DT_Digest_April_2018.pdf
In the following link it simply states "no agreement" https://www.gov.uk/hmrc-internal-manuals/double-taxation-relief/dt13300pp
Therefore the answer is probably no. You are not entitled to a UK personal allowance. This is fairly typical for individuals resident in a low tax jurisdiction
Provided you are a UK national (i.e. passport holder) or EU citizen you would be entitled to the UK personal allowance. You are not usually liable to tax on UK pension as a non-resident. This includes the state pension. However, civil service pension remain taxable in the UK.
You do not have to put your French pension on your UK Tax Return.
The properties need to be declared on your UK tax Return however.
It is possible to claim a proportion of your rent for use of home as office. I have included a link to my article on this https://comanandco.co.uk/use-of-home-as-office. It is rare that an employee would use their office to the extent that of using the actual basis. The HMRC rates are published here. The monthly flat rates can be found here: https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home
If you are not filing a Tax return you can make a standalone claim for expenses as an employee. more information can be found here: https://www.gov.uk/tax-relief-for-employees
Also, as a non- UK resident should I be tax on my UK State Pension
Also, I do get a small French pension should have put it on my UK tax return ?
Thank you so much for your help
a French
I am a French citizen I use to live in UK for 23 years 1987 to 2009 then from 2009 I have been living in Thailand I have return to UK only 10 days in 2015 that would make me a non resident .I got 2 properties in UK. I do my tax return online .Do I qualify for personal allowance ?
i get a English state pension as non resident should i paid tax on it in UK?
I was ask on my tax return if i had a foreign pension which is very small French pension. but i did not put it on my tax return and now i feel worry .that i did not do the right thing but should i be tax on it in UK?
Thank you for your future reply.
As a Spanish citizen you are entitled to the UK personal allowance.
I have a property in the UK.
I hold a Spanish passport but I live in Australia.
Am I allowed to the personal allowance?
Thanks
If you rent a property in the UK you need to file a Tax Return every year even if there is no tax to pay. I can prepare the Tax Return for you for a fee, however I cannot give out free advice on how to prepare your own Tax Return. If you wish to file it without the assistance of an accountant, register for a personal tax account with HMRC. More information is available through an internet search.
A letting agent will typically withhold 20% tax at source. If you have no tax to pay this would be refunded to you on filing of your Return. However the earliest a Tax Return can be filed is 6 April following the end of the tax year. Therefore, deduction of tax at source presents a cash flow drawback. If an application for non resident landlord scheme is approved, forward the HMRC correspondence to your letting agent and this should prevent them from withholding tax at source.
Your tax liability in the UK remains nil. If you have tax withheld and it is subsequently repaid to you, your liability is still nil. For the purpose of Danish taxation you have no UK tax. Therefore any Danish tax payable would not be reduced by UK tax. You would need to seek local tax advice for further queries as I do not deal with Danish tax
Thanks for this useful blog post.
I own a property in the UK which is being rented out.
I am leaving the UK soon for Denmark where I will be permanently resident. I am also a Danish citizen.
I understand that I will be eligible for the UK personal allowance, which means that I will not have to pay tax on any profit below £12,500 per year (where profit is rental income less allowable expenses).
My question is: How does this work in practice? Do I just not pay tax on the income I receive if it is below the allowance? Or do I still need to fill in a Personal Assessment each tax year? If so, how would this be reflected in the Personal Assessment form? Or is it that I pay tax and then ask for a refund? What is the role of the Form R43 in this process?
What about Non-resident landlord scheme (NRLS), which says that as a non-resident landlord you have to pay 20% tax on rental income. Is it correct that this does not apply in my case?
Finally, in Denmark I will have to pay c. 22% tax on any rental income from abroad. However, Denmark has a double taxation treaty with the UK, meaning that any tax I pay in the UK will be deducted from the final tax I have to pay in Denmark. How would the Personal Allowance work in this context?
Thank you very much
Sergey
You are entitled to the UK personal allowance if you hold a British passport. It makes not difference to your eligibility what income you receive. However, it is only usually rental income and certain pension/ employment earnings which are taxable for non-residents.
UK civil service pension will remain taxable in the UK. However, most private pensions and the UK state pension are not taxable for non-residents.
You would need to complete form DT individual (applicable to the country in which you are resident) to get any private pension paid gross. The state pension is paid without deduction of tax at source.
As an European Economic Area citizen you are entitled to the UK personal allowance regardless of where you are resident. Further information can be read here: https://www.gov.uk/tax-uk-income-live-abroad/personal-allowance
Since you are a UK citizen, you will be entitled to the personal allowance. Citizenship is usually determined by holding of a UK passport
If you live in Nigeria and have Nigeria residency you are entitled to the personal allowance.
Dividend income is disregarded, so you do not have to pay tax or report the dividend income in the UK. More information can be found here:
https://www.gov.uk/government/publications/non-residents-and-investment-income-hs300-self-assessment-helpsheet/hs300-non-residents-and-investment-income-2019
Check you position in the USA regarding any exposure to local taxes.
1 and 2) When you start receiving UK rental income you need to 'register for self assessment'. Please complete the following form:
https://www.tax.service.gov.uk/shortforms/form/SA1
3) Yes, you are entitled to a personal allowance. The tax year ends on 5 April. The earliest you can file a Tax Return for 2019-20 is 6 April 2020. You need to report your rental income on the Tax Return. This form can be completed online.
4) It is not necessary for the mortgage to be secured against the property that you are letting for the interest to obtain tax relief. It is only necessary to demonstrate that the loan was for the purpose of your rental business. However, it would be much easier to demonstrate to HMRC that the loan was for rental purposes if secured against your rental property. You could need to demonstrate the purpose of the loan in the event of an HMRC enquiry.
5) If you are planning to do the Tax Return without the assistance of an accountant, you would need a government gateway user ID and password.
6) Yes allowable costs include VAT.
Is a US citizen who is non-resident in the UK, and who receives dividends from a UK company, entitled to UK personal allowance? Thank you.
My wife and I bought a UK residential property (jointly) recently on a buy to let basis. I am a non UK resident. I live in Hong Kong and hold a BNO (British National Overseas) passport. I have a few questions and would appreciate your guidance.
1. Do we have to get tax registration in the UK as we expect to receive rental income? If so, when, and is there a standard form?
2. Is there a requirement to notify the HMRC chargeability to tax? If so, when, and is there a standard form?
3. As BNO passport holder, am I entitled to UK personal allowance? If so, do I need to file a form to claim allowance? Which form and by when?
4. We refinance our home property in Hong Kong (effectively a mortgage secured by a Hong Kong property) to fund our purchase of residential property in UK. Mortgage interest is paid to a bank in Hong Kong. Can this interest be allowed as a tax deduction against the UK rental income? If so, how I can prove that the Hong Kong mortgage is obtained to fund the UK residential property? Would it be possible if you direct me to the relevant sections in the tax code?
5. We will use a letting agent to manage the UK rental property and we will sign a form such that we receive full amount of rental income (no deduction from letting agent). Which tax return form(s) should I use to report my rental income to HMRC? A link to the form(s) is helpful.
6. In relation to costs that I will incurred in producing the rental income (e.g. repair, letting agent fees etc), I understand these will be allowed as tax deduction. Would the allowable costs include the VAT that is charged?
Thanks
As an EEA National, you are entitled to a personal allowance wherever resident.
As a UK resident you are liable to tax on your worldwide income. Therefore the Pakistani pension would be taxable. If you have had any tax withheld at source in Pakistan, this tax would be available as a credit to reduce any UK tax on that pension income.
As per my understanding since whatever pension I am drawing, that has nothing to do with Uk Govt since I never worked here in UK ever before coming here.
Under the terms of the double tax treaty with the US (at the time of writing) you would not be entitled to a UK personal allowance
If you are resident and national of Botswana you would be entitled to a UK Personal allowance.
It would seem that your income is less than the applicable allowance and therefore you have no tax to pay. However, I would need to establish further information in a meeting to give assurance about what i have explained above.
My sole UK income for 2018/19 was 1-profit on rent from my house £2,637 (after allowable expenses).
2-non resident UK state pension £5,005. 3-private pension £3,710.
Does this suggest I am entitled to any income allowance, or approximately what tax would be payable - thank you CM
A non-UK resident is not liable to tax on most forms of income apart from rental profits on property situated in the UK.
https://www.gov.uk/tax-uk-income-live-abroad
This means that you would not be liable to UK tax on state pension or most other pension earnings. A civil service pension remains taxable in the UK:
https://www.gov.uk/tax-on-pension/tax-when-you-live-abroad
You are entitled to a UK personal allowance as a citizen of the EEA, or as a British passport holder.
It is possible that there has been some mix-up which has led HMRC to regard you as UK resident which would explain the correspondence you have received. I cannot go into the specifics of you case in this public comment, but you can send a private message if you would like to use my services to get the matter resolved.
From 6 April 2010 onwards, citizen of Hong Kong have not been able to claim the persona allowance. HMRC would accept that you are a British national if you a British passport holder.
However, the website below confirms that prior to the handover of control, Hong Kong citizens could obtain a British passport.
Your rights as British national overseas are to hold a British passport. Therefore, provided you hold this passport you are entitled to the personal allowance.
https://www.gov.uk/types-of-british-nationality/british-national-overseas
British national (overseas) has the right to hold a British passport. Provided you have this passport you are entitled to a UK personal allowance.
I advise that as a former British national you are probably entitled to the UK personal allowance. However, this only spares you from UK tax.
You will need to check your Swedish tax position with a Swedish tax adviser. The UK personal allowance cannot be used against your Swedish income. Probably the UK pension will be treated as foreign income Swedish and exposed to local taxes. However, you would need to check the position in Sweden as I can only advise on UK taxation.
Probably you are not entitled to a personal allowance unless also a citizen of the EEA or a British passport holder.
I am an Australian residing in Hong Kong. I got a property in UK with rental income. Am I entitled to the UK personal allowance? Thanks!
You will not be entitled to a personal allowance as Switzerland is not part of the EEA:
https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm10340
I am a Swiss Citizen living in the US, having property rental income in the UK. Am I entitled to the UK personal allowance? I am not quite clear on that.
Thanks.
Based on the information you have provided, you cannot claim the personal allowance
thanks
As per the HMRC website the key determinant of nationality is that you are a UK passport holder. Provided that this is what you meant by citizenship, you would be entitled to the UK personal allowance.
If I receive UK residential rental income, but chose to relocate to live and work (full time) in Australia would I be entitled to keep my UK personal allowance as I have dual citizenship in both Australia and UK?
Many thanks
Alex
Provided that you and your wife are British passport holders, you will be entitled to the allowance. Each spouse is assessed separately. Therefore, if only one of you fulfils the criteria only one will gain the allowance.
Your retirement in itself has not effect on your personal allowance eligibility.
Thinking of applying for temporary residency in Moscow Russian Federation.
I am UK citizen, retired.
My wife of 21 years has dual citizenship ie.
UK and Russian, also retired.
Will we be entitled to UK personal allowance
for tax purposes when residency granted?