Finance charge and property tax paid abroad

Hi, I am a UK tax resident. For the 2022/23 tax year, it is my first time to submit a self assessment and the first year I am receiving a rental income from a property in Hong Kong. My questions: 1) Do I just need to put down the total finance costs (ie. interest paid for the mortgage for the property to let) for the 2022/23 period in Box 24.1 'Residential property finance costs' on the SA106 paper form? The 20% expense allowance will be deducted from my taxable income afterwards? 2) As the property has been rented out less than a year and I do not receive any property tax demand to be paid in Hong Kong yet. In this case, should I just put down '0' in Column C 'Foreign tax taken off or paid' of Page F4 of SA106 paper form? Your help is very much appreciated. Chasiu

Hi,
 

Thank you for your question. As you are in receipt of property income from overseas, alongside the SA100 Tax Return you would complete the SA106 Foreign supplementary page stating your rental income and any allowable expenses incurred. When completing the SA106 page, you are correct to submit the total finance figures with the calculation taking into account the basic rate of relief. In terms of tax deducted in Hong Kong, you would state that no tax has been deducted by placing £0 in the tax taken box. Thank you .

I also have a property abroad and have included the mortgage interest costs in my tax return. I have also included the monthly bank charge that the bank takes every month for making the mortgage payment. It is a directly associated cost to running the property. Is that correct? I paid taxes abroad for the foreign Year Ended 31 Dec 2022, in June 2023. I understand that I should allocate 3/4 of the Dec 2022 tax bill and then estimate 1/4 for 1/1/2023 to 5/4/2023. This is based off what I paid. Is that correct? And once I know the foreign tax paid for Year Ended Dec 2023 tax should I correct the estimated part in my UK Tax Return April 2023?

Hi,
You would be entitled to claim the monthly bank charges as an allowable expense as long as the charges are wholly and exclusively for the purposes of renting out the property.
In respect of the foreign tax paid on your foreign rental property you are correct in saying that you would need to apportion the foreign tax paid to coincide with the UK tax year.
If you do not know how much foreign tax relates to the period from 1 January 2023 to 5 April 2023 then you would estimate the 2022-23 foreign tax and amend the return as soon as possible as you have stated.   
Thankyou.

Hi, I am a UK tax resident and have a property in Australia which I rent out. I have to prepare Australian tax returns for my property and I engage an Accountant to do this. The only reason I need to fill out the Australian return is because of the property in Australia and the income it generates - I don't have any other Australian income. Can I claim the Australian accountant fees as an expense against my Australian rental income on my UK tax return? Do this come under the "wholly and exclusively" criteria? Thanks, Aaron

Hi aaron123,
Thank you for your question.
I would expect that when completing the SA106 Foreign supplementary page that you may claim accountant fees under Allowable property expenses if the cost has been exclusively for the benefit of the rental business.
Thank you.

I have two overseas properties in different countries which I received rental income and pay taxes accordingly. My question is: 1) I was granted the right to reside in UK in May 2024. However, I am not going to reside in UK for more than 90 days before April 5, 2025; 2) I am retired and do not work full time overseas. 3) My wife and two young children are currently residing in UK in a rented apartment. Am I a tax resident? Do I need to file for tax for 2024/2025?

Hi,
You will need to review the guidance on residence below and take the statutory residence tests, to allow you to determine your residence status. We cannot make the decision for you.
RDR3 Statutory Residence Test
Thank you.

Hello, adding onto your response to aaron123 , If the accountant fees is for everything - incl. foreign rental income, foreign capital gains, and foreign interest income, then do I claim it?

Hi,
Only accountants fees relating to your rental income from your property can be included. Any other expenses would need to claimed on the appropriate pages of the tax return.
Thank you.