# Tax & U.K. rental



## Relyat (Sep 29, 2013)

This is our first year as tax residents and are in the process of preparing our income tax return.

We have a house in the U.K. which is let via an agent and from which we receive a small income. Does anyone know (or can point me toward) what deductions are permissible for tax purposes here please?

I will, as it's my first time, be seeing my Gestor prior to submitting but would like to get as much information as possible prior to this.

Help appreciated


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## ElaineG (Jun 4, 2015)

I am pretty certain that income tax from letting property in UK must be paid in UK, however, it must also be declared in Spain as there may be a top up tax in Spain.


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## Relyat (Sep 29, 2013)

Sorry, didn't make myself crystal. U.K. side is all sorted, it's the Spanish side that I want the info about.


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## ElaineG (Jun 4, 2015)

Relyat said:


> Sorry, didn't make myself crystal. U.K. side is all sorted, it's the Spanish side that I want the info about.


I suggest a Google search. This one result Taxation of rental properties in Spain


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## pablo1 (May 9, 2016)

Relyat said:


> Sorry, didn't make myself crystal. U.K. side is all sorted, it's the Spanish side that I want the info about.


It's a massive headache, it is VERY expensive to have a rental property in UK and living in Spain. Yes you can claim loads of deductions but trust me half of the claims are usually rejected by the Spanish taxman.

Please speak to a professional as you will need to returns every three months


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## snikpoh (Nov 19, 2007)

pablo1 said:


> It's a massive headache, it is VERY expensive to have a rental property in UK and living in Spain. Yes you can claim loads of deductions but trust me half of the claims are usually rejected by the Spanish taxman.
> 
> Please speak to a professional as you will need to returns every three months


Why?


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## Chopera (Apr 22, 2013)

pablo1 said:


> It's a massive headache, it is VERY expensive to have a rental property in UK and living in Spain. Yes you can claim loads of deductions but trust me half of the claims are usually rejected by the Spanish taxman.
> 
> Please speak to a professional as you will need to returns every three months


I've never had any claims for deductions rejected by hacienda. Why should they?

I deduct things like mortgage interest payments each year without any problem.

And why is it expensive to have a rental property in the UK while living in Spain? I have one and it's cost me no more than when I was living in the UK.


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## ElaineG (Jun 4, 2015)

Chopera said:


> And why is it expensive to have a rental property in the UK while living in Spain? I have one and it's cost me no more than when I was living in the UK.


I have never been in that position, but when, having paid the tax in UK, you declare it in Spain is there not any top-up tax to be paid ?


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## snikpoh (Nov 19, 2007)

ElaineG said:


> I have never been in that position, but when, having paid the tax in UK, you declare it in Spain is there not any top-up tax to be paid ?


There may or may not be - it depends upon your personal (financial) situation.


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## Chopera (Apr 22, 2013)

ElaineG said:


> I have never been in that position, but when, having paid the tax in UK, you declare it in Spain is there not any top-up tax to be paid ?


As Snikpoh says it depends on your situation. While resident in Spain I don't pay any UK tax on my rental income (although I still declare it) because, after deductions, I am beneath the UK tax threshold. If I were living in the UK I'd probably be paying higher rate tax on it (depending on my other income) and these days the mortgage interest repayments aren't tax deductable in the UK if you pay higher rate tax. However I do pay tax on the rental income in Spain, but it's comparable to what I was paying when I lived in the UK.


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## pablo1 (May 9, 2016)

snikpoh said:


> Why?


Why? It's a headache dealing with the hacienda (Spanish taxman)


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## pablo1 (May 9, 2016)

Chopera said:


> I've never had any claims for deductions rejected by hacienda. Why should they?
> 
> I deduct things like mortgage interest payments each year without any problem.
> 
> And why is it expensive to have a rental property in the UK while living in Spain? I have one and it's cost me no more than when I was living in the UK.


Why? Our household/personal income + rental income + self-employment + joint property owners (me & wife) makes us liable to heavy taxation.

We pay large amounts of money to the Spanish taxman. In fact we were much better off in UK!!!

As for deductions for having properties in UK - Unbelievable headache they cause. One of the many good examples we have so much trouble making them understand is estate agency costs.


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## xabiaxica (Jun 23, 2009)

pablo1 said:


> Why? It's a headache dealing with the hacienda (Spanish taxman)


I'm pretty sure he means 'why do you have to declare the UK rental income every three months?'


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## snikpoh (Nov 19, 2007)

pablo1 said:


> Why? It's a headache dealing with the hacienda (Spanish taxman)


As @Xabiachica says, my question was why do you think one has to declare UK rental income every 3 months - because you don't.

As an autonomo in Spain, your tax situation is different.


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## pablo1 (May 9, 2016)

xabiachica said:


> I'm pretty sure he means 'why do you have to declare the UK rental income every three months?'


Our personal circumstances and tax liabilities made us required to declare our UK rental and world wide income.


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## xabiaxica (Jun 23, 2009)

pablo1 said:


> Our personal circumstances and tax liabilities made us required to declare our UK rental and world wide income.


Yes, but why every three months?

I'm self-employed & every three months submit a return for my work - but a (admittedly miniscule) widow pension I currently receive from the UK is only included in the final annual tax return.


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## pablo1 (May 9, 2016)

snikpoh said:


> As @Xabiachica says, my question was why do you think one has to declare UK rental income every 3 months - because you don't.
> 
> As an autonomo in Spain, your tax situation is different.


Before we started self-employment in Spain we had to pay tax as we were classed as non-residents. After being in Spain for more than 180 days in calender year we automatically become tax liable. We had to declare our rental income 4 times a year because of our irregular situation with work/kids/family.


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## stevesainty (Jan 7, 2011)

As UK rental income is taxed in UK and then declared in Spain, I just declare the net income in Spain with no deductions against it, this has never been questioned by hacienda.
In my UK self assessment I do however report the gross income and all expenses.

There was some talk a while back about HRMC withdrawing the UK personal allowance for people who only had UK rental income to declare in UK. This would have the effect of paying the full 20% tax on the net income. This would of course be offset against any Spanish tax payable, but would leave UK with most of the tax revenue. This is as it should be as the income was derived in UK. At the moment if your net UK rental is below the personal allowance there is no UK tax to pay and so HMRC gets nothing whilst hacienda gains some taxation income.


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## snikpoh (Nov 19, 2007)

pablo1 said:


> Before we started self-employment in Spain we had to pay tax as we were classed as non-residents. After being in Spain for more than 180 days in calender year we automatically become tax liable. We had to declare our rental income 4 times a year because of our irregular situation with work/kids/family.


Your situation doesn't sound so very different to many others in Spain.

Self-employed, UK rental income etc. etc.

You should not have to (or had to) declare UK rental income more than once a year.


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## Relyat (Sep 29, 2013)

Thanks for all your contributions. Stevesainty, sounds pretty much my understanding of the situation, however I'm advised to declare it gross here and then deduct expenses. End result being the same (in our situation).


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