UK Personal Tax Declaration Explained

2024-05-16

Landlord Guides

If you own a rental property in the UK and are not a permanent resident, you need to complete your personal tax declaration by January 31st each year.

As of January 31st, 2023, you are required to report rental income from April 6th, 2021, to April 5th, 2022. If your first income is from April 6th, 2022, your personal tax declaration deadline is January 31st, 2024.
 

How to Declare?

You can fill out a Self-Assessment tax return on the UK tax authority website or seek assistance from a registered UK accountant. Your property agent can provide you with the rental income and related expense details for the past year. Additionally, you need to report other directly related property expenses to the tax advisor.
 

Tax Resident vs Non-Tax Resident?

Non-UK tax residents - meaning those residing in the UK for less than 183 days per year - only need to declare rental and investment income within the UK.

Meanwhile, tax residents who reside in the UK for 183 days or more per year are required to declare all income within the UK and in other countries. These include - but not limited to - wages, dividends, investments, and rental income. If your overseas income is already taxed, you can apply for exemptions through an accountant.
 

Do Overseas Buyers Have Tax Exemptions?

Some countries have exemptions, however these do not apply to Chinese overseas landlords. UK tax residents with an annual income not exceeding £125,140 enjoy a tax-free allowance of £12,570.
 

UK Personal Tax Rates?

Non-UK tax residents:

• £0 - £37,700 - 20%
• £37,701 - £150,000 - 40%
• £150,001 and above - 45%

UK tax residents with an annual income not exceeding £124,140:

• £0 - £12,570 - 0%
• £12,571 - £50,270 - 20%
• £50,271 - £150,000 - 40%
• £150,001 and above - 45%

UK tax residents with an income exceeding £125,140 do not have a tax-free allowance.
 

Which Expenses Can Be Deducted?

Agent fees, property fees, ground rent, house maintenance costs, plus expenses exclusively related to your property are eligible for a deduction.
 

Can Loan Interest Be Deducted?

Loan interest on rental properties under an individual's name is eligible for a 20% reduction. If purchased under a company name, the interest on the rental property loan is fully tax-deductible.
 

Universal Formula:

Annual rental income - Expenses related to the property = Income - Loan interest * 20% = Pre-tax profit

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