Uk Citizen , resident overseas, inherited property, tax on income??

[Ernie2791]

Ive been out of the UK for many years now and am non-resident. Earlier this year, my father passed away and his entire estate was left to me and my sister ( who still lives in the UK).

Part of his estate was his flat, which he owned out right and now belongs equally, ( or will once probate is finally completed!) one half share, to my sister and I. Rather than sell it, we have chosen to rent it out, and my I am happy for my sister to have all the income from it.

However, the spanner in the works is the non-resident landlord scheme, but maybe its not a spanner at all, hence my question here,

What I want to do, is for all the money from the rent to go straight to my sister. I see from the non-res landlord scheme, that the agent has to take tax from the money collected from the tenant, and i am fine with that. My question is, I am hoping just my half share is taxed, not the whole amount, and also, we are getting just 600 a month rent, my income from this rent is just 3600 a year, and i have no other rent income ( or any income at all) from the Uk, so do I even pay tax on that small amount??

and secondly, what tax issues arise, if any, from me giving my share of the rent to my sister??

Thanks in advance to any help

Ernie

[Ernie2791]

and sorry, I think i posted this in the wrong forum, not really an inheritance tax question.

[Blewyncoch]

There's a form you can fill in that enables your agent to give you the full tax-free rent, the form basically says to the taxman that you will complete a return at the end of the year, and pay the tax then. Personally I find it easier than trying to track whether you've paid the right amount via the agent. Not sure about your question that you won't pay tax at all - rent is classed as unearned income, not the same as wages or salary.

[Ernie2791]

Yes, I see that. I'd rather have the tax taken out at source so i am not liable for anything at the end of the year.
Looking at tax bands, 10% for 0 - 2,150, 22% for up for 33k. so assuming 3600 a year, max, that would be 534 tax due, or 44.5 GBP per month, so is this what the agent would take out of the rent? Or am i completely off base here with all of this?

[kirstie.williamson@a]

If you are a British, EU or Commonwealth citizen then you are entitled to claim UK personal allowances against UK source income - currently £5035. So if your gross rent before expenses is £3600 then your personal allowance will cover the income hence no UK tax due - this assumes you have no other UK source income which is using your allowance. You need to complete form NRL1 from ww.hmrc.gov.uk so that your agent does not deduct tax at source unnecessarily.

Have you taken advice in your country of residence as to whether you should be declaring the rental income there ? Many countries tax on a worldwide income basis.

KW