Tax liability on Scottish rental income

S

Silica

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We've been making a rental return, declaring the income and paying tax on our Scottish holiday home to the Irish revenue, since buying the property five years ago.

But we have just been told by someone, that we should also have been paying tax in Britain, and to have registered there as a landlord.

Can anyone advise on what we should do now?

And I presume that if we do pay tax in Britain, we can either claim that back, or get some credit for it, as presumably you don't have to pay tax twice??

Thanks as always for the help
 
Silica,

I’m tax resident in UK, with a rented property in Dublin. I make an Irish tax return, and pay tax in my rental income to Irish Revenue. I complete a UK tax return for my UK income, and declare my Irish rental income also. UK Revenue gives foreign tax credit for same, so I don’t pay double tax on the rent. Your situation may be the reverse of mine.

You may PM me about this if you like.
 
Thanks James

As you say, I presume our situation is the reverse of yours. I'm obviously a *bit* disappointed that neither our Scottish letting agent, nor our Irish accountant alerted us to this.

The amount involved is not much -- approximately £4,000 nett per annum, over the last five years. Nevertheless . . . it never dawned on us that we would be liable for tax in the UK.

For your situation, is there are a tax threshold, or do you just pay tax regardless of the amount of rental income ?
 
Silica,

Because of the double taxation agreement between Ireland and UK, my rental income is not taxed twice.

For my first 3 years in UK, Irish Revenue considered me as Ordinarily Resident in Ireland, so I still had the benefit of my Irish personal tax credits.

Now I'm considered non-resident in Ireland, but as an Irish citizen, I am entitled to that portion of the personal tax credit that my income liable to Irish tax bears to my worldwide income. That portion = Irish Income / (Irish + UK Income).

That last rule may be specific to Irish Revenue, and may not be applied by UK Revenue in your case.

Please don't rely on my situation, or any info I give you. You need an accountant with knowledge and experience of the double taxation agreement between Ireland and UK.

There was one such firm who posted here in the past. I don't recall their name just now, and not sure if forum rules allow mention them anyway.
 
And what you say reminds me that we shd look into my husband's british tax status too.
Thanks again James.

S
 
Hi Silica,

I believe that Irish resident do qualify for a tax free allowance of approx £5000 in the UK. The reverse is not true for UK individuals with Irish rental income.

However you should have registered with the Uk authorities as a non resident landlordv as otherwise there is an obligation on the letting agent to withhold tax on the rent paid to you.
 
Thanks Arch2, that's useful to know.
Our agent hasn't been stopping tax -- but he just handles a few holiday lets locally, and we're probably his only overseas customer, so I guess he's not aware of the situation either. However, I will have a bone to pick with our accountant!
 
Presumable your Irish accountant was instructed by you to do Irish returns, is he able to do UK returns?

A letting agent is not responsible for your tax returns, it's the individuals liability.

What you need is an accountant in either jurisdiction that is able to do both tax returns. There must be a fair few of those.
 
Bronte said:
Presumable your Irish accountant was instructed by you to do Irish returns, is he able to do UK returns?

A letting agent is not responsible for your tax returns, it's the individuals liability.

What you need is an accountant in either jurisdiction that is able to do both tax returns. There must be a fair few of those.
Click to expand...

Most Irish Accountants can do both - it's not complicated. In fact you can do it yourself.

A letting agent in the UK IS obliged to withold tax (I think 35%) if you have not got a non resident landlord number and an agreement to return your taxes. However you only pay tax once.
 
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