Rental Income

Rental Income

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Client has moved abroad for employment, for a number of years, but will return to UK.

They are renting out UK home whilst they are away

Form NRL1(i) is to apply for income to be paid without witholding tax, am I right in thinking this would not apply and rents will be paid gross anyway as client is "normally" resident in the UK?

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Euan's picture
By Euan MacLennan
13th Jan 2015 14:07

Non-resident landlords

There is no reference in s.971 ITA 2007 to "normal" (or ordinary) residence - it defines "a person whose usual place of abode is outside the United Kingdom" as a non-resident for this purpose.  It isn't the same as the definition of resident/non-resident for general tax purposes, but that will serve as a guide to the "usual place of abode" - if the client is living abroad for a number of years, there can be no argument that his usual place of abode is outside the UK.

Incidentally, it is not witholding tax as such, but a deduction of income tax.

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By User deleted
13th Jan 2015 16:03

Thanks Euan ...

... but I could easily argue living in Hong Kong for 3 years doesn't stop his usual place of abode being UK, especially if a house is kept and the intention is to return!

As a UK domicile my client will be taxable on UK income and will be submitting SA returns, my view is that is not what this legislation is about, but I am presuming it is the lettings agents responsibility to deduct tax, unless the landlord gets the exemption?

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Replying to Moonbeam:
Euan's picture
By Euan MacLennan
13th Jan 2015 17:17

Letting agent or tenant

Old Greying Accountant wrote:

... I am presuming it is the lettings agents responsibility to deduct tax, unless the landlord gets the exemption?

If there is a letting agent, they must deduct the income tax and pay it over to HMRC quarterly.  Failing that, the tenant must do so, unless the rent is less than £100 a week and HMRC has not asked them to deduct tax.

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By User deleted
13th Jan 2015 17:38

Thanks Euan ...

... much obliged.

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