HS304 claim form or DT-individual form for interest full tax relief (non-resident landlord)?

Hi, I'm a non-resident landlord with rental income in the UK. I'm registered with HRMC for Self-Assessment as a non-resident landlord without UK tax deduction (NRL1). So each year I file a (paper) SA100 and SA105, in order to calculate and declare the taxable rental income to HRMC. Every year I also successfully apply for personal allowances for non-residents through the included SA109 form (Page RR 2, boxes 15, 17) in accordance with the Double Taxation Agreement (DTA) between UK and my country of residence. Recently I opened a savings account with a UK bank, which according to my calculations will some day lead to payment of interest higher than the current personal savings allowance (£1,000 according to my Income Tax Band). The tax on interest will not be withheld by the bank. Income from interest from a UK bank is considered "disregarded income" for non-residents according to the guidance here https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim1170 . But after researching the matter my understanding is that, since I file a tax return for the rental income, I should also fill in box 2 of "Income " in SA100, Page TR 3 (untaxed UK interest). Is filling the above box with the interest amount correct for non-residents if the tax has indeed not be deducted by the bank? According to my calculations I will most definitely use the normal "method" for all income (rental+interest) and not the "disregarded income route", since I'll want to able to use my Personal Allowance. Further on I'm mainly confused about how I should apply to HRMC for a full tax relief on the interest income, since the DT Agreement between UK and my country of residence sees for a full tax relief in the UK for interest income from a UK bank. This income is solely taxed in my country of residence. My questions are: 1) Apart from box 2 of "Income " in SA100, Page TR 3 in relation to the amount of interest, should I also fill the SAME amount in box 22 of "Residence in other countries" of SA109, Page RR 2, in order to claim for the full tax relief in the UK? Should the full amount of interest be filled in this box of SA109 or just the amount over the personal savings allowance? 2) If yes to quest. 1, should I also send an HS304 claim form or a DT-individual form or both to HRMC attached to my tax return? These forms are very similar. 3) I particularly note box (question) no. 4 of page 2 of HS304 claim form in relation to the question if I'd like to make an application for the future. That would be my first time asking for this relief. If I checked "yes" in this box, would this count as a DT-individual form application for the future or should I also attach a separate DT-individual form? What is the effect of the answer to this question? 4) A Certificate of overseas residence is needed for a DT-individual form but I can't see one needed for the HS304 claim form? Should such a certificate be included with both forms? Do I even need one if I'm already registered as a non-resident landlord? 5) Do I need to repeat the same procedure and enclose these forms and/or the certificate with my tax return every year or once is enough? Thanks a lot in advance for your help!

Could someone please help me with regard to the above questions?

Hi nickkaz,

As non resident and completing the SA109, the interest declared will show as disregarded income in the calculation.
There is no need for the HS304 unless you want this as a double safeguard.
You won't include the income again on the SA109.
If enclosing the HS304, you do need to do this each year.

Thank you.

Thanks for your answer, but I'd need some clarifications: According to my research, non-residents have two options: 1) They can either "disregard" certain income (like interest) that has arisen in the UK but they lose their personal allowance. 2) Or include this income on their UK tax return and retain the personal allowance. As noted in my initial post, I'd like to retain my personal allowance, so interest should NOT be considered as "disregarded" but declared and calculated with the rest of the income. So, should interest be declared in box 2 of "Income " in SA100, Page TR 3? Or not at all and instead immediately claimed for relief in box 22 of "Residence in other countries" of SA109, Page RR 2, as further explained in HS304 (see below)? But after that a question arises, what happens when the interest amount surpasses the personal savings allowance and how that would be taxed in my case. If I'd like to retain my personal allowance as noted above, the interest would have to be taxed in accordance with the "normal rules", not as "disregarded income". Here comes the need for box 22 of "Residence in other countries" of SA109, Page RR 2, through which I'd be able to claim the full relief for tax on interest based on the Double Taxation Agreement between the UK and my country. The notes immediately under this box advise that an HS304 form should be sent along in order for the relief to be claimed properly. So, to sum this up, if I had for example £1,500 from interest: a) Should the full amount of interest (£1,500) be declared in box 2 of "Income " in SA100, Page TR 3 and then in box 22 of SA109, Page RR 2 along with an HS304? Or b) Not declared at all in SA100 and immediately claimed for relief in box 22 of SA109 along with an HS304? Or c) be partially declared in SA100 only for the amount of the personal savings allowance (£1,000) and the rest (£500) in box 22 of SA109 for the relief along with an HS304? How are you claiming that HS304 could not be needed, if the notes under box 22 of SA109 say otherwise? I'd prefer that too, if indeed could be avoided. Thanks again in advance!

Hi,

You will declare all interest in the return and the saving allowance will be applied automatically for you then to be taxed on the difference.

The HS304 wont be required as you are not claiming exemption on UK income.

Thank you.

Sorry for this, but frankly I feel that my questions are not being dealt with properly. On the complete contrary , I will indeed be claiming exemption (relief) on UK income, particularly on interest, based on the DT Treaty between the UK and my country of residence, as stressed out in both my initial posts. Could someone please read my above posts and respond to my queries accordingly? Thanks in advance.

Hi,
As a non resident landlord, with UK bank or building society interest, you should declare the interest on SA100, even if it is disregarded income.  
It should not be shown on SA109.  
You will only need to submit HS04 or a DT individual if your have a UK pension or annuity that is being taxed in the UK, when you are not resident in the UK.  
With a SA100, SA105 and SA109, the interest at boxes 1 and 2, will be considered disregarded income in the ensuing calculations.
All you need do each year is submit completed SA100, SA105 & SA109.  
This will declare the UK rental income and expenses and the UK interest.
Thank you.

Thanks for the reply. I have no problem declaring the interest on SA100, my question is how it is going to be taxed in my case for the sum above the savings allowance. The DT Agreement sees for a full relief for all interest generated in the UK, so how will I be able to claim this relief if not through HS304 (and SA109 box 22)? Sorry for repeating my above sentences here, but please clarify if they are correct: "According to my research, non-residents have two options: 1) They can either "disregard" certain income (like interest) that has arisen in the UK but they lose their personal allowance. 2) Or include this income on their UK tax return and retain the personal allowance. As noted in my initial post, I'd like to retain my personal allowance, so interest should NOT be considered as "disregarded" but declared and calculated with the rest of the income." How exactly can I achieve this and claim the full relief of the DTA at the same time? Once again, thank you.

Hi,

Non resident individuals, who have UK interest and, or, dividends, are taxed on the interest and, or, dividends under disregarded income. Your tax liability is calculated and compared against a second calculation of tax liability, that includes disregarded income. The tax liability is then the lower of the two calculations.  

If you have paid too much tax, a repayment can be made and if you have not been taxed enough, then the amount of tax already paid is the tax payable.  

Disregarded income will be calculated when you complete your tax return for UK interest and, or, dividends and also SA109, to confirm that you are not resident and claim personal allowances.  

HS300 covers non residents and investment income: 

HS300 Non-residents and investment income (2023)

Thank you.

Thank you for the reply. Just to clarify, so in my case (non-resident with rental income+income from interest) I'd only have to declare rental income and interest on SA100 along with SA105 and SA109? With no HS304 attached to claim the full relief for the interest? And the interest income would then be disregarded and not taxed at all, even if it were above the personal savings allowance?

Hi,

For non UK residents, UK savings and dividend income is 'disregarded income' and would be declared on SA100 page TR3.  

HS304 is not necessary, as this would cover UK employment income or pension income, as allowed by the double taxation agreement between the UK and the country in question, along with the SA109 and any other supplementary page that is appropriate. You can see guidance here:

Non-residents savings and investment income (Self Assessment helpsheet HS300)

Thank you.