UK Tax Management for an Overseas Property Let

If you are planning to buy a rental home, or you're thinking about what to do with one you have just acquired, this is the place for any questions about starting out in the rentals business.
croatian_villa
Posts: 73
Joined: Mon Jun 25, 2012 10:41 am
Location: Croatia & U.K

UK Tax Management for an Overseas Property Let

Post by croatian_villa »

We are finally renting a villa overseas in Croatia this year but want to understand the best way to manage in terms of tax in the U.K. Its difficult to know how to ensure we stay within the law.

The property will be under my wifes name and will be her only income so what is the best way to manage this. Should she register as self employed, should be run a ltd company to manage the bookings?

How would we manage u.k tax payments. Do you have accountants or could this be managed easily by ourselves?


Any advice on this would be appreciated.

All the best
C
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Nemo
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Joined: Thu Aug 14, 2008 10:15 am
Location: Norfolk

Post by Nemo »

I am not an accountant but here's a few quick heads up. I assume you are based in the UK? No problem staying within the law then, just need to keep accounts and declare the income!

If she is the owner of the property, then 100% of the income is hers to declare. Self employed, submitting the accounts via a tax return should be fine. It is simple enough to do yourself, however it may be beneficial to get advice from an accountant who knows something about holiday rentals. Could be worth it's weight in gold in the long run.

Otherwise, just keep searching here for some relevant threads or the direct.gov website has some basic info that is quite concise and helpful.
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Moliere
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Joined: Thu Mar 08, 2007 10:45 pm
Location: Magalas, Languedoc

Post by Moliere »

Well, your wife can earn £8105 before having to pay tax. Against the income from the villa, you can offset all running costs (property taxes, cleaning, utilities, insurance, etc) just as a couple of lines on a personal assessment tax form with "Foreign Income" page added (no need to send in detailed invoices); you can also claim 10% of your gross rental as "wear and tear"; after all that, anything left which is over £8105 is taxable at 20%.

I don't know what the tax situation is in Croatia, but there is a double-taxation treaty which applies to Croatia (the 1981 Yugoslavia treaty is held to be still in force) so any income taxes paid locally can be offset against UK taxes.

This could well be your simplest solution unless you are confident you are going to net mega-bucks and want to minimise the tax thereon. As an example, our typical net figure for the Inland Revenue was about £8000 taxable income on £29000 turnover (as my wife was working, obviously we had to pay standard tax on that, but that is irrelevant in your case).

Maybe the simplest solution can be the best?

Mols
Jumping is just dressage with speed-bumps.
croatian_villa
Posts: 73
Joined: Mon Jun 25, 2012 10:41 am
Location: Croatia & U.K

Post by croatian_villa »

Thank you. I will probably speak to an accountant/tax advisor as you say to ensure we are maximising our profits and peruse the directgov website.

I found this link to Register as Self Employed
http://www.hmrc.gov.uk/selfemployed/reg ... elfemp.htm
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