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30/05/2009, 17:15 parsnips Joined on 28/08/2008 Posts 433 Re: Tax on UK rental  Gluestick wrote: http://www.hmrc.gov.uk/budget2009/bn54.pdf They plan to extend this apparently: to all non-residents. Picked up in a recent Tax Bulletin. It is of course Tax Neutral, if one has an income base in UK and is fiscally resident in a state with a good Dual Taxation Treaty in force, since if, for example, one pays UK tax: one then receives a credit in France. PA used to reduce a UK tax charge means this effectively increase the French liability: since tax due and paid produces a Tax Credit: yet the French Impôt calculate tax arising on whole income; and then deduct tax paid before seeking the balance. Swings and roundabouts.   Hi,     I don't understand your swings and roundabouts comment. UK rents are taxable ONLY in the UK. If the tax is reduced or negated by Personal Allowances , this would have only a marginal effect in France where the net rental income is used only to calclate the tax rate applied to french taxable income and where the rents are NOT in themselves taxed.(See the UK /France DTT Article 5-"incomefrom immovable property".and Article 24 "avoidance of double taxation".    Report

01/06/2009, 8:48 Gluestick Joined on 22/03/2006 UK and Nord Pas de Calais Posts 2,893 Re: Tax on UK rental Hi,     I don't understand your swings and roundabouts comment. UK rents are taxable ONLY in the UK. Agreed: it is a core principle of international tax (And in particular "Withholding Tax") that tax on profits arising from "Immovables" accrue to the Fiscal Body where the immovable is sited. If the tax is reduced or negated by Personal Allowances , this would have only a marginal effect in France where the net rental income is used only to calclate the tax rate applied to french taxable income and where the rents are NOT in themselves taxed.(See the UK /France DTT Article 5-"incomefrom immovable property".and Article 24 "avoidance of double taxation". As in nearly all jurisdictions now, individuals are taxed on a "Worldwide Income Arising", basis. Subsequently mitigated by any Dual Taxation Treaty in force. Thus profits arising from (e.g.) a UK real property, will fall to tax in the UK: then form thereafter the basis of holistic global income, on which the French (e.g.) Fiscal Authority will seek to tax: less any tax credit due, under the Dual Taxation Treaty. Therefore using Personal Allowances to mitigate a UK liability reduces the tax charged in the UK: ergo the actual amount of tax paid would be less: ergo the Tax Credit would be less. The actual French Tax arising would wholly depend on all other circumstances of income. Unless you are suggesting that rents from property in the UK do not fall to tax at all in France: in which case one needs to commute pensions, amass cash and invest in UK letting property and be fiscally resident in France! Where irrespective of income, one would pay no more than Basic Rate UK Tax of 20%, instead of the French Rate of 30% once income exceeds € 25,927 ! BTW: you are aware that a new DTT came into being in 2008 and should be in force in 2009? http://www.lg-legal.com/assets/Downloadablefile/French%20Tax%20News%2004-2009.pdf Immovable property rules are in fact Art.6. Not 5. Further BTW: I mentioned earlier the planned extension to abolition of Personal Allowances for all non-residents; in an "Early Warning" Tax Bulletin. During the past ten years there have been immense changes in UK tax treatment of anything "Foreign". And, as always, the devil is in the detail. Whilst hoi polloi focus in the Budget is prices of booze, fags and fuel, like icebergs, each Finance Act is a mass of new tax law and proposed changes: and behind the scenes, of course, Treasury and the Exchequer are constantly working with such as CCAB, et al to hammer out forward changes: some introduced by SIs. Hard to keep up with!     "Yes, but that apart, Mrs Lincoln, did you enjoy the play?" Gluestick    Report

01/06/2009, 9:31 parsnips Joined on 28/08/2008 Posts 433 Re: Tax on UK rental Hi Gluestick,       Re your post , income from immovable property is under art.6 in the "new" as yet unapplied treaty, but under art.5 in the old,still applicable, treaty,; to see the reason for the total exemption from french tax it has to be read in conjunction with art.24b.of that "old" treaty.       I can see no such specific exemption in the "new" treaty, but none of the commentaries on it picks up on this , so I think we will just have to wait and see how it is applied when (if) it comes into force.       Having read the information about the withdrawal of UK personal allowances; this clearly says that it applies only to persons holding british passports solely by reason of being "commonwealth citizens" and meeting no other test .    Report

01/06/2009, 11:00 Gluestick Joined on 22/03/2006 UK and Nord Pas de Calais Posts 2,893 Re: Tax on UK rental Yes but that is what was passed in 2008 and comes into force this year or 2010. (vis a vis personal allowances amendments). What is currently under debate is yet another matter. The core precept seems to be that where a person is non-resident, and their global income falls to tax in their present jurisdiction of residence, then they must expect to be taxed using the allowances and tax bands and threshholds of that jurisdiction: and no other. Corporate tax affairs have become even more complex! What fiscal authorities are endeavouring to do, of course, is create harmonisation; particularly so in the EU as this (and common tax and corporate laws) is a core concept of EMU. Internationally, since the World is now a 24/7 global capital market, efforts are being made to provide a level playing field on corprate taxes in order that different bourses and stocks can be evaluated on a single benchmark, rather than having to carry out arcane calculations to remove skewing. Britain is also desperately trying to remove anomolies of Domecile and Residence from tax law. Increasingly driven by the unpalatable reality of many of the top financial wheeler dealers earning millions in the City and not paying their whack of UK tax.   "Yes, but that apart, Mrs Lincoln, did you enjoy the play?" Gluestick    Report

01/06/2009, 11:20 Llantony Joined on 23/08/2004 South West France Posts 356 Re: Tax on UK rental It seems a bit unfair - and I've probably misunderstood - that e.g. teachers' pensions are taxed in the UK even when people don't live there, but the personal allowance won't apply if you live outside the UK.    Report

01/06/2009, 11:49 Gluestick Joined on 22/03/2006 UK and Nord Pas de Calais Posts 2,893 Re: Tax on UK rental If no personal allowance applies then the Tax Credit for Tax Paid under the DTT will then be higher. (Since the tax will be charged at the basic Rate on £0 onwards). You can't have it twice! In France, the "Family" free of tax threshold is far higher than 2 X UK Personal Allowances: unless they are two higher rate age allowances: which evaporate above a pretty low income threshold anyway.   "Yes, but that apart, Mrs Lincoln, did you enjoy the play?" Gluestick    Report

16/06/2009, 8:25 parsnips Joined on 28/08/2008 Posts 433 Re: Tax on UK rental  Llantony wrote: It seems a bit unfair - and I've probably misunderstood - that e.g. teachers' pensions are taxed in the UK even when people don't live there, but the personal allowance won't apply if you live outside the UK. Hi,       I've only just noticed this, and you may have been answered elsewhere, but if you are a British citizen you are entitled to your full personal allowance against any UK tax liability.    Report

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