Rental income from overseas

If I have rental property in Hong Kong and the income will never transfer to UK. Could I need to pay and file the foreign income tax?

Hi,

Tax in the UK is calculated using the arising basis. Some individuals, however, can instead, claim the remittance basis. You will need to review the guidance in relation to whether the remittance basis applies to your circumstances. If it does and you choose to claim the remittance basis, will need to complete a Self Assessment tax return, reporting the income not remitted to the UK.  

Please note that if you choose not to remit your property income in the tax year in which it arises, you will be taxable on this property income if you remit it to the UK in a later tax year.  

You can see guidance here:

Residence, domicile and the remittance basis: RDR1

Thank you.

Hi, Thanks for letting me to raise a question here. I have a property with mortgage in Hongkong under my sole name. However I don’t rent it out as my parents is living here and they pay the mortgage monthly to the bank from their own account. Under this circumstances, does it count as rental income and need to do tax return? Beside, if I sell the property later, do I need to pay capital gain tax? Thanks a lot!

Hi,
Yes this is classed as rental income and you will need to declare the income received.
As it is no longer your main residence you will be liable to capital gains tax if/when you sell the property.
Thank you

Thanks. However , under this circumstances, the property is my parent's are paying my mortgage. It didn’t generate any income and no rental agreement signed with them. Does it still be considered as rental income? Thanks a lot

Hi,

Are you renting the flat to your parents? charging rent and making a profit. If so this is rental income as you would be conducting a trade.

Please see PIM4300. 

PIM4300 - Rents related to a trade or profession

If they are just living there and paying your mortgage then this is not classed a rental income. However if you sell the property in Hong Kong and you have not lived in it for 100% of the time you may be liable to Capital Gains Tax.

Tax when you sell property

Thank you.

Thanks for your helpful reply, as I just registered online for the self assessment and got the UTR number ,however, in this case, I think I don’t need to send a self assessment return, do I just leave it or I just need to send a return because I registered for this? Thanks

Hi,

As previously advised, as your parents are paying the mortgage this is classed as rental income and as such you do need to declare this and complete the tax return.

Thank you.

Hi, I am feeling confused actually. Your previous reply said “ If they are just living there and paying your mortgage then this is not classed a rental income.” I am exactly under this circumstances, why you now say these needed a tax return? Thank you so much for the clarification.

Hi
You are receiving a benefit by them living in your house and paying the mortgage - this is basically them paying rent as you are not having to pay the mortgage yourself and is therefore taxable income.

Thank you for your reply. I understand that but they are my parents, they are giving me money for paying the mortgage, could that counted as gift? It is really questionable . Thanks a lot

Hi,

No, as they are living in the house, it is rental income and needs to be declared.

Thank you.