3 Apr

Lettings Income; UK Revenue & Customs takes an interest

Authorised Lettings Income, arranged under management through an Agent, requires UK Income Tax to be deducted at source and paid over to Revenue & Customs by the agent.

Tax deducted is the basic rate % (currently 20%) of the Rent Income, net of Agents fees and contract costs. The deduction represents a withholding, which can be offset against Personal Landlords Tax liability to Income Tax, where arising.

UK Residents, moving offshore for a Non resident period or Non resident Landlords based offshore, will want to receive their UK Rental Income gross without deduction of tax. This can be organised by application to the Revenue (Charity, Assets & Residence Division) who grant an exemption direct to the Agent to pay the Landlord income gross of tax.

Non residents are liable to UK Tax only on income arising in the UK e.g. Rental or Other or Remittances into the UK. All Landlords are required to return Income received direct, or through an agent, as accounts under a Self Assessment Tax Return, supplement ‘Land & Property’; if tax exemption has not been applied, the Agent will need to provide a Statement of Tax deducted to the Landlord for the Tax Return.

To facilitate the process, Wilshers & Co, Accountants, can process the following by agreed engagement:

  • Company or Individual Non resident Landlord, NRL1 Form for Revenue clearance, with Agent nominated;
  • For all Landlords, maintain monthly accounts of allowable costs and income by receipt of copy agent invoices and statements of account and Tax deducted.
  • Maintain a register Lettings history, of capital purchase cost, continuing capital additions (disallowable annual replacement costs) and proceeds for the tax assessment of Capital Gains for sale of the property in the relevant year Tax Return;
  • Prepare Land & Property Supplement (and for Non Residents file with Non Resident Supplement) and SA Personal Tax Return for the relevant year.