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Where Taxpayers and Advisers Meet

Overseas Property - Self Assessment

annasproperty
Posts:5
Joined:Thu Aug 23, 2018 4:06 pm
Overseas Property - Self Assessment

Postby annasproperty » Thu Aug 23, 2018 4:45 pm

Good afternoon,

I'm getting ready to rent my property overseas (Poland) for the very first time. I personally own it and my tax residency is in the UK.

I spoke to the tax office in Poland and was told that, by law, I would be taxed in Poland on any income I made from the rental even though my tax residency was in the UK.

The information that I found on the gov.uk website is rather confusing. On one hand, the website says that rental income is taxed differently: https://www.gov.uk/tax-foreign-income/foreign-income-thats-taxed-differently on the other that the tax is "paid in the normal way" which means that only income over £2,500 must be reported.

My questions are:
1) If I'm taxed in Poland, pay tax and complete self-assessments there, do I have to complete a Self-Assessment: Foreign Income pages (SA106)?
2) If so, can I claim relief on the tax paid in Poland or will I end up being taxed twice?
3) If so, I project the rental income to be less than £2,500 a year? How is such income reported and taxed?

Thank you.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Overseas Property - Self Assessment

Postby maths » Sun Aug 26, 2018 5:06 pm

Property income from Poland will probably be subject to tax in Poland and also in the UK. Any Polish tax can be offset against any UK tax on the same income.

In terms of any UK filing the Notes to the Foreign Income pages provide as follows:

"Property income allowance
From 6 April 2017, any income from overseas property, including UK property, up to £1,000 is exempt from tax and doesn’t need to be reported on a tax return. This exemption applies even if your share of this income is from property you own or let jointly.

If your total income from your overseas property, including UK property or furnished holiday letting (FHL) income reported on the ‘UK property’ page, is £1,000 or less, don’t complete the ‘Foreign’ pages unless your allowable expenses are higher than your turnover and you want to be able to claim relief for the loss against future property income. If you do this don’t complete the property income allowance box (box 14.1).

If your total income from your overseas property, including UK property or furnished holiday letting (FHL) income reported on the ‘UK property’ page, is over £1,000, complete the ‘Foreign’ pages by either:

• claiming the new allowance in box 14.1 - if you claim the property income allowance, you can’t deduct any allowable expenses or claim any other allowances
• calculating your property profits by deducting allowable expenses and allowances - if you do this, you can’t claim the property income allowance

If you have more than one property business, the total amount of property income allowance claimed can’t exceed £1,000."

annasproperty
Posts:5
Joined:Thu Aug 23, 2018 4:06 pm

Re: Overseas Property - Self Assessment

Postby annasproperty » Fri Aug 31, 2018 3:10 pm

maths, thank you for responding.

I spoke to tax offices in both countries and they confirmed tax liability in Poland and the UK. Main liability is in Poland where the income comes from and then in the UK due to the tax residency. Like you said I will be able to claim the property allowance (or the expenses) and be able to offset the tax paid in Poland. HMRC also advised me to use exchange rates available on their website or to be consistent with the source used.

The only headache now is to remember about different tax year end deadlines.


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