Tax on rental income

Hi ,
 

Thank you for your question. A declaration or trust is a legally binding document that creates a trust. Most types of trust giving an interest in property to somebody who is not the legal owner now need  to be registered with HMRC via the Trust Registration Service. You can find guidance on the registration requirements and how to register at :  Register a trust as a trustee . There is also more information about what types of trusts need to be registered at : TRSM23050  . My colleague appears to have answered the other questions raised in your previous post. Is there anything which requires clarification ? Thank you .

Hello HMRC team, I have a question regarding rental income and property income allowance. In a previous tax return, income from property rental was reported, and deposit protection was claimed as an expense. This year, the deposit was refunded, but there was no income or expenses from property rental. It is understood that the refund of the deposit should be considered income. If this is correct, can the property income allowance be used in this situation? Thank you for your assistance!

Hello, If someone rents out a room in their UK home and claims the Rent a Room Allowance on their tax return, while also owning a property abroad which they rent out and declare as foreign income, can they claim the Rent a Room Allowance for the UK rental income and the Property Allowance for rental income from abroad as well? Thank you

Thank you. Can you please confirm that the exact steps that need to be followed are below: 1 Write trust deed (me being legal owner of the property my parents being beneficiary owners), expressing the split of income - I can look up example / template online for this 2 Send the trust deed along with a cover letter to HMRC - stating my name, my parent's names, residential address (and as they are living abroad, their correspondence address would be the same as mine), DoBs and explaining that I am the legal owner and my parents would be the beneficiary owners. Also asking for UTR to be assigned to my parents and HMRC online account to be created for them in order for them to be able to be able to submit their tax returns. Please note they do not have UK NINO or any other UK relations. 3 You mention Trust Registration Service - I assume that HMRC registers this based on my Trust Deed and cover letter - or do I need to do anything (beyond sending Trust Deed and cover letter) 4 Taxation - my parents live in Poland which has double taxation treaty with UK and you stated earlier that UK has first taxation rights on any UK property income. 5 Do my parents need to submit tax return even if the rental income would be below the below the £12,570 tax free allowance threshold (and no other UK income)? 6 Rental income to be sent to bank account held in my name, me then sending the money to my parents as per the Trust Deed. 7 In the future - how can I change the Trust parameters (for example from my parents getting 100% of the rental income to parents getting 50% and me getting 50%) Kind regards, 

Name removed admin .

Hi My daughter owns her own house. If she goes travelling and rents it out, can I receive the income from the property and declare it on my self assessment? This would of course be done with her written consent. Thank you.

Hi ,
 

Thank you for your quesion.  Your parents do not need to be co-owners of the property.  Deed of assignment)  . This states that by way of a valid declaration or deed of trust you can assign the income from the property to your parents.

Thank you .

Hi ,
 

Thank you for your question.  For more information regarding Property Income Allowance and what are considered relievable receipts, Please refer to our Property Income Manual at PIM4424: PIM4424 - Property allowance: contents: definitions: relievable receipts    . Thank you .

Hi ,
 

Thank you for your question. Yes, you can claim rent a room separately from the Property Allowance. Where a taxpayer has taxable receipts after rent a room has applied, they are normally taxable as property income together with the rest of the rental business i.e. foreign property income, see : PIM4001 - Rent-a-room: overview  .  Thank you .

Hi ,
 

Thank you for your question. Step 1 and 2 of your query is correct. In terms of 3, you would need to check the details in the following link for if the Trust needs to be registered or not, which is an action you need to carry out and would not be automatic based on the Trust deed completed. See : Manage your trust's details  . Point 4 is also correct, property income within the UK falls under first taxing rights of HMRC, even if living overseas. Point 5 - As non-residents, all property is requried to be submitted to determine worldwide income and any taxes due. Point 6, there is obligation to where rental income is received, only who has legal and beneficial rights over such income. The link provided goes into detail as to firstly creating the Deed, as well as how to update the Trust from 100/0% to the chosen percentages through the Trust registration Service. Thanks   .

Hi, I have a specific situation that I was hoping you'd help me clarify. I have a main home that is not rented out. I also have a flat in London that I use for work and am considering renting out the spare bedroom in that flat. My understanding is I can't use the rent a room scheme, as the London flat is not my main home. So I will declare the income and pay tax accordingly. But when it comes to the bills, what percentage can I claim as a rental expense? I will be in the flat a few nights a week, and the spare room will be rented out a few nights a week. Do I split bills down the middle, or work out a percentage based on occupancy? Thanks!

Hi ,
 

Thank you for your question.  If your daughter is the sole legal and beneficial owner of the property the rental income is their income for taxation purposes, you cannot include this on your own tax return on their behalf.  However, your daughter can execute a declaration of trust under which they transfer and give beneficial interest of the income to you. More information can be found in see: TSEM9160 - Ownership and income tax: legal background: ownership - income follows property   : TSEM9170 - Ownership and income tax: legal background: ownership income follows property - variation   and  : TSEM9520 - Ownership and income tax: express trusts - written declaration   . Thank you .

Good evening HMRC may I get advice. I purchased a property in 2018(no mortgage) I received rental income and paid the relevant tax. In 2021 I set up a ltd company and under legal advice drafted a blind trust stating that I give permission for the limited company to manage the property and receive the rental income. The trust states that the limited company is liable for any tax incurred from receiving these rental payments however the trust does not affect the ownership of the property. Is this suitable for the HMRC? May I add since the limited company has been receiving the rental monies all taxes due are up to date and fully paid

 Hi Lodd-Lon-tax Queries,
You cannot use the rent a room scheme when the accommodation is not part of your main residence.
The detailed guidance is here. You can define your main residence by referring this guidance:
PIM4001 - Rent-a-room: overview
The guidance on expenses is here:
Allowable expenses
Guidance on splitting expenses is here:
Expenses incurred wholly and exclusively for the property rental business
It centres around this principal “wholly and exclusively”.
 “Where only part of an expense is for your property rental business you can deduct that part as long as it’s wholly and exclusively for the property business”.  
You will need to figure out a fair way of doing this that will adhere to that principal. 
Thank you.

Hi georgealder21,
Thank you for your question.
 I am unable to answer this question without seeing a copy of the blind trust you have had drafted.  
Please send a copy of any documents you have to HMRC at:
Pay As You Earn and Self Assessment,
HM Revenue and Customs,
BX9 1AS,
United Kingdom.  
We will then be in a better position to advise you.
Thank you.

 

Thank you very much HMRC Admin 17 - I will read through the link you posted and follow up if any further questions.

Hello
I own a small flat in Slovakia which I'm thinking of selling.
I have been living in a rented property in the UK for the past 10+ years and the idea is to put the money from the sale as a deposit on a property in the UK (if it's possible).
Will I be able to transfer the money from the sale of the flat in Slovakia to my UK bank account (and what paperwork would they require) and what are the implications please?
Thank you very much. Really appreciate any advice.

Hi Susanna
The disposal of the overseas property, will need to be reported in the capital gains section of a self assessment tax return for the tax year in which the property was disposed of.  
You will need to work out if you have made a gain on the disposal of the property.  
There is a capital gains calculator a: Tax when you sell your home: Private Residence Relief, which you can use to work out if there is a gain.  
All figures must be in UK pounds sterling.  
Under the terms of Self Assessment, we do not provide an official exchange rate and the onus is on the individual to use a just and reasonable exchange rate for each acquisition and disposal.  
For your convenience, there are exchange rates at: 
[ARCHIVED CONTENT] Exchange rates from HMRC in CSV and XML format and for older rates at:
[ARCHIVED CONTENT] HM Revenue & Customs: Exchange rates
You are free to use any of the supplied rates or one of your own choosing.  
If you must pay capital gains tax on the disposal in Slovakia, you can claim up to 100% of the foreign tax paid, as a credit against UK capital gains.
Thank you