Rent sum paid outside the UK: effect on UK tax 70-day rule?

[Wonkeye]

I have a question to anyone who knows anything about the tax advantages concerning UK holiday lettings (the one about being available for holiday letting to the public for at least 140 days a year and actually let as a holiday let for at least 70 days a year) as outlined at
http://www.direct.gov.uk/en/MoneyTaxAnd ... DG_4017930

Background: we are a British/Dutch couple living in the Netherlands and have a holiday cottage in the UK which we use partly ourselves and also for holiday lets. Our UK accountant is taking account of this in our tax returns. We may not in fact be able to derive the maximum benefit as we do use it ourselves as well.

Anyway, …. would we be right in assuming that the rental income is only liable for UK tax if actually paid in the UK (or remitted into the UK)? The former would apply to practically all our lets, but we do get the occasional one booked and paid for in Holland into an account in Holland. This is actually an introductory question, the REAL question being: if rents received in Euros and kept in Holland are not taxed in the UK (but declared in the Netherlands), would this also have an effect on this 140 day/70 day rule? More precisely, if that part of the rent didn’t count as earnings taxwise, would it still count toward achieving the minimum number of days needed to qualify for the rule about a minimum of 70 days? E.g., if we already had 63 days of bookings paid for in the UK and 7 days paid for in the Netherlands, would we have to make sure we got our extra week in the UK to qualify for this ruling?

I should add that this a purely hypothetical question as we already have 17 weeks in the current financial year, which is our first year, but I’m curious all the same!

Wonkeye

[Mountain Goat]

would we be right in assuming that the rental income is only liable for UK tax if actually paid in the UK (or remitted into the UK)?

No, you would be wrong in assuming that. You have an asset in the UK, producing income, and that has to be declared in the UK.

I don't know where you are resident for tax purposes, and I'm not qualified to give you any advice on your other (complex) questions.

MG

[Wonkeye]

Thanks for that part of the answer, MG. We were just curious what our accountant is going to be doing with what we've already submitted to her (including euro amounts) and LMH is so much more accessible and friendly. By the way, we are resident in the Netherlands for tax purposes except regarding this cottage, which all has to be declared to the UK tax authorities.

Wonkeye

[Mountain Goat]

Wonkeye, with complicated tax queries and when we needed a second opinion, we found the free query service with the London Financial Times to be excellent (not sure if it still runs in the same format). Their advice once saved us £40k capital gains tax on a property, which was not well-received by our (then) accountant.

We've found that a second opinion has always been worthwhile with accountants, which doesn't say much about our skills in choosing one....

Wilfred Fry in Worthing (UK) may well be a good source of information - they're very clued up for this sort of query.

MG

[mpprh]

My tax tutor always said " ... the only way to escape the UK taxman is 1)No income in UK, 2)Not resident in UK, 3)Not born in UK, 4)Never been to UK .......... unless they change the law !"

The tricky one is domiciled outside UK. For UK born subjects, this is very difficult to prove and includes reservation of a burial plot outside UK.

We discovered a little known (but very useful) fact when we lived in Europe, but rented properties in UK.

Even though we were non resident, we were still entitled to personal allowances that could be set against the rental income.

Worth looking into this ?

Peter

[Wonkeye]

Thanks Peter!

Yes our accountant has already told us about the personal allowance aspect.

Re the burial plot - that's an extreme version of what we know already, which was that one condition of being a non-dom was plans to be buried in the new country of residence. Our plans/my plan include having an over-30-yr record of paying into a burial scheme, which I've now and again thought probably a worse idea than setting up a savings account for that purpose, but which in this instance may have proved a good idea after all. I first settled in the Netherlands 35 years ago, which our accountant says should be long enough. Another factor is that before 1974 the domicile of a married woman was dependent upon the domicile of her husband. As we got married in 1970, I acquired his domicile! Ha ha! Little knowing at the time that it would be so beneficial!

Wonkeye

[Mountain Goat]

includes reservation of a burial plot outside UK

Now that could be a nice little earner, flogging square inches in a tax efficient country, say Croatia, and even if it was one's garden and the occasional urn arrived, so what? Cremations only, on second thoughts, Mrs G might get ******* off with wooden boxes cluttering up the veg patch.

MG

[mpprh]

includes reservation of a burial plot outside UK

Now that could be a nice little earner, flogging square inches in a tax efficient country, say Croatia, and even if it was one's garden and the occasional urn arrived, so what? Cremations only, on second thoughts, Mrs G might get ******* off with wooden boxes cluttering up the veg patch.

MG

If it doesn't work out for you, I could organise a few hectares in France. You sell 'em, I just take a commission. Would you like to be buried in sunny Languedoc, or facing a chateau in the Loire valley ?

Peter