Non Resident Landlord Scheme and Capital Gains

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    Non Resident Landlord Scheme and Capital Gains

    I am a 54 year old who is thinking about leaving the UK permanently (retiring to SE Asia). I have 2 properties in the UK with no mortgage. I currently live in 1 of the properties, the other is rented out.

    I believe all my tax affairs are up to date.

    Rather than sell the properties and incur Capital Gains, I would prefer to rent both of the properties out when I leave the UK. Having read through HMRC’s guide to the NRL scheme can a TAX expert please advise if my understanding is correct before I engage a Specialist NRL Scheme Accountant (SNSA) to take care of my Tax affairs?

    1. The SNSA will arrange for approval from HMRC to have the rent paid directly to me.

    2. The SNSA will annually submit the self-assessment Tax return on my behalf.

    3. I do not have to use a Managing Agent to manage my properties. I can use my Brother/Sister as the contact on the AST for any issues/repairs. Both properties will be covered by British Gas Landlord Homecare 400.

    4. If the tenants decide not to renew the term of the AST then I can fly back to the UK to manage the transition of tenants – Tax deductible.

    5. If I am out of the country for more than 5+ years (actually 6) and have complied with HMRC rules of being a non-resident and decide to sell my properties, I do not incur any capital gains tax on any of the properties.

    6. Any advice on any other tax affairs to consider when leaving the country most welcome.


    I look forward to your replies,

    Lat

    #2
    The house you live in does not attract CGT for at least 3 years after you move out. However you mention renting both out for 6 years or so.
    You can sell them once you are non resident but I would recommend not in the same tax year as your departure and there will be no CGT as long as you remain non resident for at least 5 complete tax years.
    "I can fly back to the UK to manage the transition of tenants – Tax deductible." I very much doubt that particularly as you will also visit you brother and sister so the trip is not wholly and exclusive. They are also contacts on the AST.
    We had this scenario on here a good couple oy years ago and the LL was flying in from Australia to redecorate his property between tenants. From memory he wrote to HMRC prior to a travel claim and was told 'No'. I will see if I can find it.
    Regards Peter

    Comment


      #3
      Thank-you TaxationPete

      I should have added 1 more question to that list due to conflicting information.
      7. Will I still get my UK personal allowances?

      An accountant is saying I will lose my UK Personal allowances and references...
      http://www.hmrc.gov.uk/manuals/rdrmmanual/rdrm10340.htm

      Another thread from this site references...
      http://www.landlordzone.co.uk/forums...ident-landlord

      I do have a UK passport, I am UK citizen and am not changing my citizenship.

      Comment


        #4
        This extract comes from manual 10340 for which the list includes UK nationals :

        Non-resident individuals who satisfy one of the conditions below are entitled to United Kingdom Personal Allowances
        •an individual who is a national of Israel or Jamaica

        or
        •an individual who is an EEA national of

        Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Irish Republic, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal inc. Madeira & The Azores, Romania, Slovakia, Slovenia, Spain, Sweden and United Kingdom

        Comment


          #5
          Thank-you Gordon999

          Given the details above and with reference to HMRC's Residency test, is the following statement correct?....

          Currently it is possible to break residency in the UK by maintaining an average of less than 91 days per tax year in the UK and having little or no UK work, even if family and home remain in the UK.

          I have no children but I do have brothers/sisters and 2 homes in the UK.

          Comment


            #6
            Your brother and sister do not have any bearing on your residence status.

            Just remember each tax year commences from April 6th and ends on April 5th in the following year.

            You can become "non-resident" from day 1 if you leave UK to take up permanent residence in another country provided you keep no UK work and keep no home in UK ( this means both your 2 properties must be rented out).

            In the second tax year, avoid spending more than say 10 weeks in UK. You may be required to declare the no of days stay in UK on your rental tax return.

            I think for only 2 properties and no mortgage, if the bookkeeping records are good, you could manage and complete the tax return yourself. Its just entering the total rent collected and total expenses ( expenses paid during the tax year for annual building insurance, maintenance repairs, and decoration + bank charges .

            Comment

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