Compliance & Tax
HOW YOU PAY TAX ON RENTAL INCOME ON RESIDENTIAL PROPERTY IN THE UK
You can receive your rent either:
- in full and pay tax through your annual self-assessment – if HMRC approves you to do this (see below)
- with tax already deducted by your letting agent or your tenant at source. If you want to pay tax on your rental income through annual self-assessment and not by deduction at source then you are required to complete a Self-Assessment form annually and also complete form NRL1 and return it to the HMRC. If they then give approval to us, as your managing agent, to pay rent gross of Tax, for all future years you will need to declare your rental income in your Self- Assessment tax return. HMRC will not approve your application if your taxes aren’t up to date, for example if you are late with your tax returns or payments. Each person owning the property or properties is required to apply as an individual.A non-resident landlord approval number is granted to each UK property owner who is non resident or a foreign national. Only one number is issued per person and is applied across all properties for calculating UK income from rental properties. This number is for life and there is no requirement to apply for additional properties.To assist you can either:Arrange this yourself – Go to the HMRC website and complete an application online.
You will need to have all your details available, including BTL property addresses and your personal details. You must notify us of progress of the application as we are instructed by HMRC to withhold 20% of your rent until the approval is granted, to enable this amount to be offset against future income tax liability if approval is not granted.
Ask Homes or Houses to refer you to an accountant, who will complete the registration for you, they can also then complete your annual self-assessment for you and we will work them to provide all financial details pertaining to your property to enable them to do so. The fee for this service is:
- £60 (inclusive of VAT) for registration per person.
- £99 for annual self-assessment completion and submission per person.The accountant will ensure the application is swift and followed up to ensure approval. They will pass the approval number to you and to us with your approval and will be in touch when your first or next self-assessment is due. You will deal directly with the accountant.
Frequently Asked Questions
From April 1 2016, anyone purchasing an additional/second property will have to pay an additional 3 per cent stamp duty. The changes apply to companies and individuals no matter how many properties you are purchasing.
Currently freehold property purchases involving transactions less than £40,000 don’t need to pay SDLT or tell HMRC about freehold land and property transactions with a total chargeable consideration of less than £40,000. But the total chargeable consideration includes any linked transactions so caution is advised.
Click Here to download the frequently asked question’s PDF regarding Capital Gains Tax produced by the HMRC.
Click Here to download the shortened version of the frequently asked question’s PDF regarding Stamp Duty Tax produced by the HMRC.
ANTI-MONEY LAUNDERING REQUIREMENTS
Due to a tightening on Anti-Money-Laundering regulations by UK Estate agents, Homes or Houses are now required to provide the vending agents with the following certified documents upon acceptance of an offer to purchase on a property. Below is specified criteria that all property purchaser is now required to meet.
PROOF OF IDENTITY
The primary form of identification must bear a photograph and signature. Copies must also be certified as a true copy of the original, and must be valid, up to date and be signed by the holder.
- Full UK or foreign passport that has the Machine-Readable Zone
- Full UK or foreign photocard driving licence
- Photocard national identity card that has the Machine-Readable Zone
PROOF OF ADDRESS
The second form of identification must confirm the purchasers permanent residential address.
- Letter/bill from utility company (less than 3 months old) or a water bill, which must relate to the current charging period). The letter you receive must confirm you receive a service from the company and cannot be printed from the internet. Mobile phone bills are not accepted.
- UK council tax bill (for the current year)
- Full UK photocard driving licence bearing residential address (if not already used as your proof of identity)
- UK or foreign bank credit card / bank statement (dated within the last three months and not printed from the internet)
- UK mortgage statement (dated within the last 12 months and not printed from the internet).
We are unable to accept utility bills printed off the internet. Online bank statements may only be accepted as ‘Proof of Address’ if stamped and certified bearing the account holder’s address. Mobile telephone bills, store card statements and any documents showing a “care of address” or non- residential address cannot be accepted.
CERTIFICATION OF DOCUMENTS
Documents can be certified by: (Please note that individuals within the above categories in most countries are acceptable but exceptions may apply.)
- A director, manager or bank counter staff of a bank or an authorised credit or financial institution.
- An Embassy, consulate or high commission officer in the country of issue.
- A qualified lawyer or attorney registered with the relevant national professional body in the jurisdiction of country of issue.
- A qualified accountant registered with the relevant national professional body in the jurisdiction of country of issue.
- A notary public, a member of the judiciary, a senior civil servant or a serving police officer in the jurisdiction of country of issue.
The certifier should provide the ‘certification’ directly on the copy of the document, providing the following information:
- Print (in capitals), Sign and Date the copy document
- Clearly indicate his/her position or capacity
- Provide his/her contact details, including the name and address of the company/institution that they represent and any registration numbers if applicable.
- The certifier must state “I certify this is a true copy (and true likeness if photo present) of the original document.”
Please note that independent certification is HCA requirement (Homes & Communities Agency) and we may have no option but to return documents that are not certified in accordance with the guidelines.
WHAT IS ‘ANTI MONEY LAUNDERING – AML’
Anti-money laundering (AML) refers to a set of procedures, laws, and regulations designed to stop the practice of generating income through illegal actions. Though anti money laundering laws cover a relatively limited number of transactions and criminal behaviours, their implications are far-reaching. For example, AML regulations require institutions issuing credit or allowing customers to open accounts to complete due- diligence procedures to ensure they are not aiding in money-laundering activities. The onus to perform these procedures is on the institutions, not on the criminals or the government.