Tax on UK rental income

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04 Oct 2008 00:00 by Sanchez1 Star rating. 818 posts Send private message

Hi,

I am planning to move to Spain in January and was planning to rent out our UK property.  As I understand it, I need to apply to join the Non-resident Landlord Scheme with HMRC so that I won't pay any tax (from rental income) in the UK.  This will mean paying the tax in Spain. 

In the UK, mortgage interest, letting agent fees etc. are all tax deductible.  Is this the same in Spain?  Can anyone point me in the direction of a website for further info?

Thanks in advance

David

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11 Nov 2008 15:29 by Acapulco Star rating in Costa Blanca South.. 353 posts Send private message

Acapulco´s avatar

 Can no one help this poor guy? I have the same question. 



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11 Nov 2008 16:23 by Sanchez1 Star rating. 818 posts Send private message

Hi Acapulco,

From doing some digging around and speaking to people, it looks like I would have to pay tax on my UK rental income in the UK, not in Spain.   Once you join the Non-resident Landlord Scheme with HMRC, the letting agent will not deduct tax from the rental income.  HRMC will then make a decision as to whether or not we will need to complete a tax return.  Because we are only likely to make a small profit after fees, mortgage interest etc and because we can take in to account our UK personal tax allowances, it is unlikely that we will be asked to fill in a UK tax return.  

As far as the Spanish side of things are concerned, because of the double taxation agreement, we would not be liable to pay any tax in Spain on our UK rental income.

I may be wrong, but that was my interpretation. 

If you find out otherwise, let me know.

Cheers

 

David



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11 Nov 2008 16:37 by Bellarina Star rating in Oxford. 32 posts Send private message

Hello,

 

As far as I'm aware you cannot deduct expenses from your rental income for tax purposes. We do not actually have an advice page on this yet on the website I link to below, but this is  something that will be coming shortly.

 

Rental income tax is 25 per cent of gross income if you are non-resident (correct as of March this year) in Spain.

 

I am working on some more country specific advice pages, but this is a work in progress so keep checking in!



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11 Nov 2008 16:49 by Sanchez1 Star rating. 818 posts Send private message

Hi Bellarina,

Are you talking about rental income from a Spanish property here?



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11 Nov 2008 16:54 by Bellarina Star rating in Oxford. 32 posts Send private message

Hi,

 

Yes I am - were you asking if tax from property in the UK could have expenses deducted? In that case I'm not sure off hand. I know you can apply to have your rental income untaxed in the UK via the Non-Residents Landlord Scheme but as for in Spain I shall try and find out for you.

 

 



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11 Nov 2008 16:57 by Sanchez1 Star rating. 818 posts Send private message

Yeah, I was talking about tax on my UK property.  I think I've worked out that I won't have any tax liabilities in Spain on my UK property and probably not in the UK either (because I can use my personal tax allowances).

cheers

 

David


 



This message was last edited by Sanchez1 on 11/11/2008.

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11 Nov 2008 18:28 by Acapulco Star rating in Costa Blanca South.. 353 posts Send private message

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I have read that Spanish tax is 25% of 50% of the rental incom . Does anyone have knowledge of this?

As am retired and have no mortgage I only have my personal allowance which is wiped out by my pension.



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11 Nov 2008 20:07 by Sanchez1 Star rating. 818 posts Send private message

Hi Acapulco,

If it's a Spanish property you are renting out, I think you will need to pay tax in Spain, but not sure about the rates   I don't think  your UK  personal allowance could have been used for tax relief on a Spanish property anyway.

David



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11 Nov 2008 21:48 by Acapulco Star rating in Costa Blanca South.. 353 posts Send private message

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 Sorry, I did not make it clear. It is a UK property we want to rent out.



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