Tax on rental income

[biffa]

If anyone wants up to date information on the new law and how it affects letting income and obtaining AL registration please PM me with your e-mail address. Let me know if your property is held in your own name or by a company.

[biffa]

I realise that this may seem a rude question but is there a DIY option or is it compulsory to have an accountant/fiscal rep/reporting entity or can a non-resident be compliant without one?

In theory it is possible to deal with this yourself. In practice - very difficult.

[widge]

New legislation in UK says that all overseas property lets have to be registered for National Insurance Contributions. If you are retired like me then you have to register as self employed. Any profit above £5772 per annum is liable for NIC deductions and they can go back 6 years. The UK tax return will be the source information for determining profit levels.

What the Portuguese give (simplified tax regime) the UK takes away (NIC's on profit).

The official I spoke with confirmed that this was only released to them yesterday & registration is mandatory - without it you can't get the necessary documentation to apply the Portuguese simplified tax regime (STR) social security obligations.

Villa Rental companies have also been informed to apply the (STR) wherever appropriate and maintain record of accounts in all circumstances.

[shanagarry]

With all of this bureaucratic processing (professional fees and time), licensing, property maintenance and tax imposition - is there a healthy margin to be made from renting your property today?

Once you've dealt with the bureaucrats and their demands you've then got your clients to contend with. Seems like a lot of cost and effort that must surely impact your ROI (Return on Investment). I know I've made this observation several times in the past but on the occasions I visit this Forum I read of more and more regulatory pressures that can't be a lot of fun to have to comply/deal with

[carolyn]

New legislation in UK says that all overseas property lets have to be registered for National Insurance Contributions. If you are retired like me then you have to register as self employed. Any profit above £5772 per annum is liable for NIC deductions and they can go back 6 years. The UK tax return will be the source information for determining profit levels.

Hi Widge, do you have a link to an HMRC website explaining this I cant find anything by Googling. Thanks.

[widge]

This is very new legislation & still being challenged but the thread below will give you some insight to what is being proposed.

http://www.taxation.co.uk/taxation/Arti ... d-knickers

widge

[widge]

Also………

NICs on rental income

September 15, 2014

Class 2 National Insurance Contributions (NICs) are not due on rental income, unless the letting business is a trade such as a hotel. However, someone inside HMRC believes that buy-to-let landlords should be classified as self-employed traders and has been issuing demands for the past six years of class 2 NICs.

If you receive a demand from HMRC for class 2 NICs and/or a questionnaire about your letting activities, contact us to review the facts. Our tax experts can help you decide whether class 2 NICs are due on your buy-to-let profits.

Rashid v Garcia [2002] UKSC SpC348

[e-richard]

IANAA, but surely you are only referring to UK lets?
Overseas lets are different in many ways.

[widge]

I can't be definitive about this Rich but another link below adds to the discussion……

http://www.morrell-middleton.co.uk/furn ... s-summary/

[Sheila]

New legislation in UK says that all overseas property lets have to be registered for National Insurance Contributions. If you are retired like me then you have to register as self employed. Any profit above £5772 per annum is liable for NIC deductions and they can go back 6 years. The UK tax return will be the source information for determining profit levels.

It is my understanding that no nic's are payable once you reach pensionable age. This was the case when I was in business.

[Geoff]

New legislation in UK says that all overseas property lets have to be registered for National Insurance Contributions. If you are retired like me then you have to register as self employed. Any profit above £5772 per annum is liable for NIC deductions and they can go back 6 years.

Irrespective of whether it is/isn't the law and does/doesn't apply to overseas property, see :

https://www.gov.uk/national-insurance/overview

which states that :

" If you’re employed, you stop paying Class 1 National Insurance when you reach the State Pension age.
If you’re self-employed you stop paying: Class 2 National Insurance when you reach State Pension age "

So, you should be OK as long as you are of (UK) State Pensionable Age?

More worrying, perhaps, is the new Portuguese Tax regime mentioned in the October Newsletter, see :

http://www.carvoeiro.com/finance/New%20 ... %20rentals

Something tells me it won't be that simple!