Property in the UK - tax advice

Discussion in 'Accounting & Tax' started by mazwegian, 9th Oct, 2017.

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  1. mazwegian

    mazwegian Member

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    Hi,
    I have two properties in the UK that I bought ages and ages ago. Since moving here 10 years ago, I have done a UK tax return each year, and paid any tax in the UK as necessary.
    Meanwhile I have been living here and paying tax here on my PAYG income.
    I have kept them separate.

    I have just been sent a letter from the bank in the UK asking me to fill out a self certification form with my tax residency status... basically asking me to provide info that I live in Australia and provide my tax file number.
    Is anyone on the site in a similar situation, and is there anyone or company who can offer services so that I can understand my future tax liabilities and what this actually means for me?

    Thanks in advance
    Mazwegian
     
  2. MSB

    MSB Well-Known Member

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    I am not sure about the other end in UK but as per ATO, all foreign income regardless of whether tax is already paid in another country, should be declared as part of our tax return to ATO. This is something many don't understand and don't even declare their overseas income. It could be similar requirement from UK as well.
     
  3. Trainee

    Trainee Well-Known Member

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    (Not advice). As an australian tax resident you should be reporting worldwide income on your australian tax return.
     
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  4. SatayKing

    SatayKing Well-Known Member

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    Haha, sorry for having a giggle but it isn't at you. Rather the twists and turns of governments regarding tax.

    It's similar to the FACTA requirements which are applicable here. Google ATO FACTA for that.

    My bet is if you Google FACTA UK, you will likely discover a similar arrangement for UK expats.

    It's about tax avoidance and attempts to stem money laundering.

    Sorry if there are any spelling errors. I'm using my phone and I'm rather clumsy with the tiny thing.
     
  5. Trainee

    Trainee Well-Known Member

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    Id be more concerned about your tax returns.
     
  6. MSB

    MSB Well-Known Member

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    You can call ATO to clarify your local return. Do need to mention all your details and can ask generic question.
     
  7. SatayKing

    SatayKing Well-Known Member

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  8. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Maz

    A resident Australian taxpayer must declare and lodge a return and include in it local and worldwide foreign income. Each year you will have signed a declaration etc and its unusual to suddenly discover this "mistake". You would likely be dealt with under avoidance measures which can impose hefty penalties for wilfully or recklessly dealing with your obligations.

    A credit for UK taxes paid on the rental income may be given but full and final tax sits in Australia - especially if you had other Australian income as a higher marginal rate may apply The UK and ATO have very good tax sharing powers and detection is a matter of time. The new UK requirement is intended to assist tax information sharing..It helps them tell the ATO about your foreign income. If you dont do that the issues doesnt go away but the UK will impose a very high tax rate for breach of your UK obligations. You probably suspect it but you do need to get your affairs sorted. The ATO will soon know about your undeclared income.

    The ATO may accept that you only need to prepare and lodge the past 2-4 years as amended returns rather than 10 years. My tip - write to the ATO and indicate you have become aware of this issue and wish to correct your affairs. Ask them if they consider you need to amend beyond 2-4 years.
     
  9. Propagate

    Propagate Well-Known Member

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    If it helps, this is what we do/have done (been in Aus 10 years now).

    We informed UK Gov that we were leaving the UK and would no longer be UK tax residents (2007). I can't remember if this was done as a call and for them to "put a note on the system" or whether there was a from. I have a feeling there was a particular form we filed that stated such.

    We also lodged an NRL1 form, (non resident landlord), which mean the agent doesn't deduct UK income tax form the rent received. A copy of this form is sent to any new agency otherwise they have to withhold income tax from the rent.

    I had my own company in the UK so always had to do self assessment returns, Emma was employed and never had to file a self assessment. When we told the UK Gov we were leaving and that we still had a property in the UK, jointly owned 50/50 that would be let, they wrote to me and said they never wanted to see another self assessment from me unless they wrote to me and request one ion the future. For Emma, they went the opposite and asked her to start to file a self assessment every year even though we were no longer going to be tax resident.

    So, each year we dutifully file a UK return for Emma only with the UK gov, it doesn't make enough money to go over the UK tax free threshold so there's never any UK tax to pay.

    Then, when we lodge out Aussie returns, the UK rent is included on those returns for both of us and WE PAY TAX ON IT as we're already over the tax free thresholds here. It is basically added on to the rest of your income. The exchange rates to use are published on the ATO website for each year.

    My understanding is that, had there been any tax paid in the UK on Emma's UK returns there would be credit back for it on the Aussie returns.

    We have always also ticked the box on the ATO returns that states "do you own assets overseas of more than $50k" or some such, I guess that is for when we ever sell and have a possible CGT event with it.

    From what you have said I'd be finding a decent accountant that knows both UK & Aussie laws and seeking amendments before you get too far down the road...

    Cheers.
     
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  10. mazwegian

    mazwegian Member

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    Thankyou all for your responses and advice. I'll get onto this right away.
     
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  11. Beano

    Beano Well-Known Member

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  12. Scott No Mates

    Scott No Mates Well-Known Member

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    Propagate likes this.
  13. Propagate

    Propagate Well-Known Member

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    Thanks @Scott No Mates we pulled our over years ago, not long after we arrived. Aus super seemed a bit more flexible in terms of accessing it than the UK one so we figured we'd just pull the lot over. Glad I did, (there wasn't much in it, but what there was had performed better here than the UK. Mainly because I've found it easier to take a slightly more active interest in it over here and moved it around it bit from time to time.
     
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  14. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Another key issue for UK expats can be portability of UK work pensions and the complex QROPS to SMSF strategy which can mean a SMSF can be used to receive the UK pension and "park" the super pension for 5 years in a new smsf before it can be accessed here...without satisfying a UK condition of release.

    These rules are tougher but also can be simplified when a (new) SMSF is involved. A new SMSF is easier to meet the QROPS rule...But the new rules dont allow a existing smsf to receive a rollover.
     
  15. Melbcr

    Melbcr Member

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    Hi @mazwegian
    How did you go with this? I too am in a similar situation and was wondering if you had any joy in getting the clarification.
     

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