Is NRL self assesment needed for net rent <£2500?

Residential flat rented out gives £2300 per year while client abroad. Is self assess in UK required?

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Does individual renting out small flat in UK (not resident there now so currently classified as Non-Resident Landlord) for less than 2500 net income per year after allowed expenses have to file tax return even if the letting agent has deducted 20% tax from the rental income at source? (No other income in uk)

Replies (13)

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By David Ex
11th Feb 2024 18:36

Not sure, John. What's your research on the matter suggest?

Just how small is the flat if it's yielding £200pm?

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Replying to David Ex:
paddle steamer
By DJKL
11th Feb 2024 18:59

I would love to know where it is at that money.

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Replying to DJKL:
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By FactChecker
11th Feb 2024 19:32

Maybe that's all the landlord has managed to extract when faced by the XL Bullies patrolling inside?

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Replying to David Ex:
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By john_5
11th Feb 2024 20:23

Thanks David for reply.

Lol. I am speaking about income once the rent is halved with other party, and after allowed expenses such as management fees, service charge, maintenance costs and various required tests e.g. plugs. I guess its still cheap though for tenant!

My research on matter has left me unsure. Up until now I believed that as long as net income was less than 2500, nothing was required to be done, esp when 20% was withheld at source by agency for resident landlord tax. The agency do a quarterly report to HMRC.

However, on varying accounting websites from following discussions I have seen conflicting views, for larger amounts involved. Some say as long as 20% withheld, no tax is due anyway, others say, a landlord should submit tax return to get refund.

On HMRC website it says client should contact them for such a small amount, but client has no written proof of doing so, other than a one hour bill for each call from abroad (mainly on hold) from three separate phone calls where two said to do nothing and one person said they needed a self assesment.

Given potential fines involved, feeling is that they will submit tax report this year, but even when no tax was owed in previous year, would a fine be involved for not submitting anything?

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By David Ex
11th Feb 2024 20:43

Guess one question is what the liability is on the rent in whatever country the client is now resident in.

Further question, is the client entitled to a UK personal allowance.

https://www.gov.uk/tax-uk-income-live-abroad/personal-allowance

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Replying to David Ex:
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By john_5
11th Feb 2024 20:55

As EU citizen I guess they meet one of the requirements for tax free allowance.

Current country has double tax agreement, but to be honest, client doesn't mind paying tax twice given small amounts. For example, the remaining income is submitted with earnings in current country, but no double tax agreement forms or anything are filled in. Its just to declare it in case of problems and the process is fairly straight forward and electronic, unlike HMRC postal submission (no access to electronic gateway and helpline dont help).

The idea is not to save money, just not to get a tax fine in UK, if a requirement is being broken. I think the safest thing is to get them to apply for SA and move forward with that.

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JCACE
By jcace
11th Feb 2024 20:44

I would have thought it worthwhile submitting a tax return as there's likely to be a tax refund due, isn't there.
If HMRC have issued a notice to submit a tax return, lack of tax liability will not remove late filing penalties

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Replying to jcace:
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By john_5
11th Feb 2024 21:07

Thanks jcace,

Yes. Agreed.

No notice has been issued.

However, once a self assesment is submitted, can a notice be issued for previous year (where no tax was due, but where person lived abroad)?

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Replying to jcace:
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By FactChecker
11th Feb 2024 21:10

And that's the bit that so many (hopefully not on here) seem to misunderstand.
The 'order' that can determine whether various penalties (late filing and/or late payment being the main two) starts with:
1. Did HMRC issue a NTF (notice to file)?
If so, unless you manage to persuade HMRC to withdraw that notice (and before the filing deadline), then expect a penalty if you don't file (on time or at all);
2.If they didn't issue a NTF, then the onus shifts on to the taxpayer notifying HMRC if information needs to be reported (usually because tax is due but sometimes for other reasons) ... so does taxpayer 'need' to notify HMRC?
As well as being more complicated (because there are so many possibilities), this has the added issue that HMRC don't like to simply receive 'unexpected' returns and so sometimes seem to 'lose' them - although they have no right to do that, it is safer to notify them that you'd like to make a return (and they'll send you a NTF)!

It's almost Kafka-esque but has been like this for an awful long time ... which is why the best thing to do is (a) appoint an accountant to notify and file for the most recent year and (b) ask them whether there's any need for late submissions for earlier years AND whether you should apply to be withdrawn from the SA regime for future years?

Answers to these 'simple' questions can depend on a lot of other information not provided here (quite rightly as it is a public forum).

BTW location of "where person lived" is rarely as relevant as where income was derived/generated.

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Replying to FactChecker:
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By john_5
11th Feb 2024 21:31

Thanks FactChecker for your reply and insight. This is not my area of work, but your advice sounds like the way forward.

Yes. I wasn't even sure about asking about this in public forum.

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Replying to FactChecker:
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By john_5
11th Feb 2024 22:19

In relation to your point:

"the onus shifts on to the taxpayer notifying HMRC if information needs to be reported"

this comes back to my original question. (Sorry, I realize its probably annoying to go in a circle so im not going to labour this any more. You have been very helpful.)

Given the small amount involved (below £2300 till now, even below 2000 somewhat after all allowed expenses accounted for), and given agency already make a quarterly report to HMRC, after taking the 20% tax, my assumption till now was that nothing further needed to be done. I assumed as long as they get the 20% they are happy and thats that.

When HMRC were called 3 times on phone they were very vague (see above in thread somewhere). But I still have some fear that "nothing further needed to be done" is not fully correct and penalties are possiblein future. I guess we still need to keep calling the hmrc help line.

The fact that the gateway system is difficult to log into for non-residents (actually impossible) is very disconcerting as sending things in post from abroad and waiting for replys is ridiculous now a days.

Once again thanks for replies.

FactChecker wrote:

And that's the bit that so many (hopefully not on here) seem to misunderstand.
The 'order' that can determine whether various penalties (late filing and/or late payment being the main two) starts with:
1. Did HMRC issue a NTF (notice to file)?
If so, unless you manage to persuade HMRC to withdraw that notice (and before the filing deadline), then expect a penalty if you don't file (on time or at all);
2.If they didn't issue a NTF, then the onus shifts on to the taxpayer notifying HMRC if information needs to be reported (usually because tax is due but sometimes for other reasons) ... so does taxpayer 'need' to notify HMRC?
As well as being more complicated (because there are so many possibilities), this has the added issue that HMRC don't like to simply receive 'unexpected' returns and so sometimes seem to 'lose' them - although they have no right to do that, it is safer to notify them that you'd like to make a return (and they'll send you a NTF)!

It's almost Kafka-esque but has been like this for an awful long time ... which is why the best thing to do is (a) appoint an accountant to notify and file for the most recent year and (b) ask them whether there's any need for late submissions for earlier years AND whether you should apply to be withdrawn from the SA regime for future years?

Answers to these 'simple' questions can depend on a lot of other information not provided here (quite rightly as it is a public forum).

BTW location of "where person lived" is rarely as relevant as where income was derived/generated.

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Replying to john_5:
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By richard thomas
12th Feb 2024 10:05

In my view a person with only £2,500 income from property (and assuming that is the only UK source income) and an entitlement to claim a personal allowance is not required to notify liability, as s 7(7) TMA would apply.

But as others have said, they would be able to make a repayment claim on R43 to reclaim all of the NRL withholding tax.

DTR under UK law is irrelevant - it is the residence country that would give relief for UK tax (of which there should be none)

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Replying to richard thomas:
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By john_5
12th Feb 2024 11:29

Thank you Richard for your reply.

"But as others have said, they would be able to make a repayment claim on R43 to reclaim all of the NRL withholding tax."

Yes, I kind of wondered about this (the agency withold a flat 20% and submit quartly report to HMCR), but the priority was just to make sure that no regulations/responsibilities are getting broken/unfulfilled on our side. I feel naive in just assuming that the 20% was all that needed to be done, although I still am inclined to think nothing further is required.

There is still a lot to think about but this thread has been very helpful as more calls to the HMRC helpline will be required and the discussion here has helped think about this more clearly.

Also, as some suggested, getting an accountant in UK could be a good option, although the numbers are very small, so might not even be relevant, and being abroad makes this difficult too. Its mainly for piece of mind, as you really read of some horror stories for HMRC tax penalties, and given parties involved are not UK citizens its difficult keeping up to date on requirements, especially when the gateway access portal does not work. I really think that HMRC should make access to the gateway portal easier from abroad so people that lived in UK in past and may return there at some point can keep up to date with their own personal situations quickly.

Thanks again for your input.

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