Category: Landlord Tax

How Does It Work When You Are A Non-Resident Landlord ?

by godwinbusinessservices, posted in Landlord Tax

When you own a property in the United Kingdom but live abroad, it can be complicated to know what the tax differences are when just being a simple resident landlord and what to do to make the right steps and still stay compliant. 

What makes being a non-resident different ? 

When you own a property in the UK but live abroad, then the tax regulations will be different for you to be compliant and pay your taxes on the properties you own in the UK. The NRLS (Non-Resident Landlord Scheme) is a scheme that helps to tax your UK rental income while living abroad. However, if you are not registered with this scheme and you rent out your property through an agency then the tax will be deducted directly before you declare your income. 

You need to be aware and look at the double taxation agreement between the UK and the country you live in. You will always have to pay tax in the UK, but you need to see how it works in the agreement with your country of residence. Also, non-resident landlords will usually be required to file a Self Assessment tax return, even if you don’t have any tax to pay. Earning rental income from the UK means you have to follow the normal UK tax year from which is from the 6th of April to the 5th of April of the next year. 

You may be entitled to a UK Tax Free Personal allowance of £12 570 which is the amount of income that you will not have to pay tax on. In terms of Real Time Capital Gains, when you are a non-resident, you will have to report the sale of any property, with or without tax being due on the sale. 

We can help you register for the Non-Resident Landlord Scheme as well as helping you with your Self Assessment, so get in touch straight away! 

Airbnb Landlords : HMRC Cracking Down To Stop Tax Evasion 

by godwinbusinessservices, posted in Landlord Tax

In the last few years, the popularity of platforms such as Airbnb has grown exponentially with users having the opportunity to let out their properties for a short or medium term. However, in a strategy to halt landlords not paying taxes, HMRC are using data transmitted by Airbnb to find people using the platform who may not have declared their rental income. 

HMRC using AirBnB data 

Since 2020, Airbnb have been compelled to share data with HMRC and provide information such as earnings from the hosts on the platform. Information can go back to the 2017/2018 financial year in the UK. In 2023, it is believed the tax office has sent out over 800 letters to potential hosts who may have paid insufficient tax. 

Following previous inquiries into the situation, Treasury estimates 50% of owners were unaware of their obligation to pay taxes on the rental income they receive via the use of these type of platforms. Furthermore, HMRC is also targeting hosts and property owners on various online rental platforms such as Booking.com, HomeAway and TripAdvisor.

Consequences and Penalties 

HMRC are also targeting landlords who receive income from their properties in foreign countries. For example, since January 2020, every digital platform that operates in France has been required to report information including income earned and the number of transactions to the national tax authorities.

If you fail to report your income from Airbnb, then you may face penalties depending on your behaviour and whether or not you deliberately concealed information to avoid paying tax on your rental income. Depending on your situation, the penalty can go vary from nothing to 100% of the tax due you failed to declare. 

We can help you clarify your situation and avoid any nasty surprises, contact us straight away.