Non resident company bought a UK rental property. The completion statement was adjusted for rent received by the seller in advance - the rental adjustment was for gross rent (no withholding tax). NRL approval granted by HMRC but not until after the first invoice had been issued by the company, hence there was a requirement for the tenant to deduct income tax on the first rental payment. The first invoice raised (on which income tax was deducted) spans 05/04. In completing the 2013/14 non resident landlord return (where rental income has been apportioned on the accruals basis), can we set off all income tax deducted on the first invoice (even though it is partly for a period post 05/04)? Or must we match the income tax already deducted with the rental income that it relates to (ie partly to the period post 05/04/2014). The company now has approval to receive rental income gross and there are therefore no further income tax deductions made by the tenant.
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Tax deduction
Not sure why this has not been answered before now...
The income assessable in respect of property income is measured on an accruals basis, but the obligation to deduct tax at source is from the payment made at the date the payment is made and should be offset against the liability for the year in question. It doesn't get matched to income because it is an obligation on a tax year by tax year basis.