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Foreign tax paid on UK property income

Client now resident in Spain has UK property income on which he has paid Spanish Tax and UK NRL Tax

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I am completing a Tax Return for a client who has had Non-Resident Landlord Tax deducted by the Estate Agent and has also paid Spanish Tax on the UK property income. I am aware that the NRL tax is to be entered in Box 21 of the property pages but am uncertain where the Spanish tax suffered should be shown. Would it be in Box 21 of the Residence, remittance basis pages? 

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By Matrix
03rd Dec 2021 15:07

The Spanish tax does not go on the UK tax return. Any DTR would be against Spanish taxes.

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By Wanderer
03rd Dec 2021 15:44

In any case how could you know the Spanish Tax figure if the UK tax return hasn't yet been completed & the UK liabilty calculated?

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By sammerchant
04th Dec 2021 16:19

The Spanish Tax was paid during the UK Tax year 2020-2021.

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By Wanderer
05th Dec 2021 04:58

You need to update your practical knowledge of how the calculations work. You look at the tax on the income, not when it is paid. AND, as Matrix says, & MEL infers, the Spanish tax doesn't hit the UK return.

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By sammerchant
06th Dec 2021 09:16

Thanks. I have since discovered that. My client was adamant that "his friend" and drinking companion in Malaga had recovered the Spanish tax via his UK Tax Return. There is a form for completion, found on https://www.gov.uk/tax-uk-income-live-abroad/taxed-twice.

Thanks for your input.

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By Matrix
06th Dec 2021 10:59

The UK will have the first taxing rights on real estate - check the treaty.

The only way to get the Spanish tax back is from the Spanish Tax Authorities (by claiming DTR for the UK tax under their rules).

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By More unearned luck
03rd Dec 2021 19:23

If the client is resident in Spain in the year of the return, then as the others have said.
The client suffers £X tax in the UK and in Spain £Y-£X tax if that sum is positive. If it's negative there is no tax in Spain. The Spanish sums will, of course, have been converted to Euros.

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By sammerchant
04th Dec 2021 16:22

So U.K. tax takes precedence over Spanish tax? But on dividends, for example, you set the foreign tax against any U.K. tax liability within certain rules. Is it the other way around on property tax?

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By Wanderer
05th Dec 2021 04:51

You appear to be confusing UK income & overseas income.

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