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Where Taxpayers and Advisers Meet

UK rental income Non-resident landlord

qaboos5136
Posts:4
Joined:Tue Jan 21, 2020 5:07 pm
UK rental income Non-resident landlord

Postby qaboos5136 » Mon Jan 27, 2020 3:12 pm

I have had a rented property since 2005 and have duly declared rental income in my tax returns up to March 2018. In April 2018 I left UK to work abroad where I am paid in local currency and pay local taxes.
I continue to get rental income from my UK property of £17000. The property is also mortgaged to a UK bank and I continue to make monthly mortgage payments. I received a mortgage statement for tax year 2018-19 which stated total loan interest of £1466.

In making my 2018-19 tax returns the allowable loan interest in box 26 of the Returns is automatically HALVED , i.e. £733 and HMRC states that I should enter the remaining 50% of the loan interest in 'Residential finance costs not included in loan interest and other finance costs'. Where in the tax returns is this as I cannot see this specific box. Is this correct as I believe I am a standard rate tax payer. Also mention that I still receive UK companies dividends and savings interest from UK banks, these I held when I was working in UK prior to April 2018.

Thanks
Norman

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

Re: UK rental income Non-resident landlord

Postby maths » Wed Jan 29, 2020 5:35 pm

The rules for deduction of finance costs were changed effective April 2017.

For tax year 18/19 only 50% of finance costs (includes interest) are allowable as a "full" tax deduction with the balancing 50% of such costs being relievable at 20% as a tax reduction.

See Supplementary Page SA 105 "UK Property" for completion; see Box 26 "Allowable loan...." and Box 44 "Residential finance costs".


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