# Paying tax on overseas income



## jilly63

Hi, can anyone please advise on the rules about paying tax on UK rental income while living in NZ? 

E.g. We have a flat in London that we rent out. Because of the UK tax allowance we pay no tax there. But we've heard we may have to pay tax in NZ on this income?

Thanks.


----------



## topcat83

jilly63 said:


> Hi, can anyone please advise on the rules about paying tax on UK rental income while living in NZ?
> 
> E.g. We have a flat in London that we rent out. Because of the UK tax allowance we pay no tax there. But we've heard we may have to pay tax in NZ on this income?
> 
> Thanks.


There's a reciprocal tax agreement between NZ and the UK. You'll still have to complete a UK tax form, but you can apply to have the income free from UK tax. Then you include it in your NZ tax return. 
We found it easier to get a NZ accountant to advise us.


----------



## topcat83

kaljames said:


> Could you keep the money in the UK in a bank account? I do that with money I earn from the internet; have built up thousands in it and the NZ government cant touch it :-D


It's still taxable, either in the UK or in NZ. You've just got away with it because they don't know about it.


----------



## topcat83

kaljames said:


> My money is taxable in New Zealand because I earned it while in NZ but because it is spread through out a few US bank accounts; New Zealand does not have the jurisdiction to see my accounts therefore I do not delclare this income.
> 
> I will how ever pay tax on it gladly in the US when I get back since the tax rate is about 15-20% less than the NZ rate.


When do you move back? I assume soon, as you cannot find anything good to say about New Zealand.


----------



## jilly63

topcat83 said:


> There's a reciprocal tax agreement between NZ and the UK. You'll still have to complete a UK tax form, but you can apply to have the income free from UK tax. Then you include it in your NZ tax return.
> We found it easier to get a NZ accountant to advise us.



Thanks for that speedy reply. Much appreciated. Do you know if the IRD taxes UK income of this type? Even though we've already been assessed for tax purposes in the UK and as the rent is our only income there, it comes in lower than our annual UK tax allowance. 

PS. Who is your NZ accountant?


----------



## topcat83

jilly63 said:


> Thanks for that speedy reply. Much appreciated. Do you know if the IRD taxes UK income of this type? Even though we've already been assessed for tax purposes in the UK and as the rent is our only income there, it comes in lower than our annual UK tax allowance.
> 
> PS. Who is your NZ accountant?


Your tax is assessed overall, as far as I know. It's your total income, regardless of where you earn that income from. 

I'll dig out the contact details of our accountants - they've changed their name recently and I can't find it on-line (rotten memory on my part)


----------



## escapedtonz

Mmm maybe not strictly correct some of these answers......
My wife and I still have a house in the UK which we receive an income from in the guise of rent.
We declared this to HMRC in the UK before we left and applied for it to be paid tax free from our management company.
Since we do not have any other income from the UK I suppose we were granted the income free of UK tax as the annual figure we receive is well below the individual income tax limits or personal tax allowance in the UK - think that is about £7495 although I could be wrong on that figure.

As part of the Immigration process into NZ individuals are allowed to earn income from overseas for a period of 5 years from the date of arrival free of NZ tax (although this could be classed as the date one entered the country if you came for a visit before emigration!!!).
Im also sure that you don't have to declare any income from overseas until this 5 years is up then by law you must do - one just has to make sure you have got your 5 year anniversary date correct.
So in our situation with Permanent Residency we can continue to earn an income from overseas until April 2017 free of NZ tax.
Not sure if this rule applies to people coming in with other visas.
As far as I know this "benefit" was introduced by Immigration NZ to assist migrants into the country - an added attraction so to speak


----------



## carosapien

Excellent advice escapedtonz, I hope your accountant hasn't been telling you to pay tax on your overseas income for the last five years Topcat. 

Pensions are also overseas income too. There was a very informative thread on another forum explaining proposals to change the taxation of overseas pension funds after 4 years. The implications of that change will affect many migrant pension pots.

If you _[follow this link http://taxpolicy.ird.govt.nz/news/2012-07-24-foreign-pensions-issues-paper-released]_ you'll be able to find out a bit more about the proposals.


----------



## topcat83

carosapien said:


> Excellent advice escapedtonz, I hope your accountant hasn't been telling you to pay tax on your overseas income for the last five years Topcat.
> 
> Pensions are also overseas income too. There was a very informative thread on another forum explaining proposals to change the taxation of overseas pension funds after 4 years. The implications of that change will affect many migrant pension pots.
> 
> If you _[follow this link http://taxpolicy.ird.govt.nz/news/2012-07-24-foreign-pensions-issues-paper-released]_ you'll be able to find out a bit more about the proposals.


Indeed not, and we haven't. Apart from anything else we were making a slight loss on them - so could actually offset them against our NZ tax. But as we've been here over 5 years now we're liable to pay tax on any profit from how on.

Oh - and a very clever way of directing people to a rival website, Carosapien. That is breaking forum rules so I have changed the search term to something more useful.


----------



## jilly63

escapedtonz said:


> Mmm maybe not strictly correct some of these answers......
> My wife and I still have a house in the UK which we receive an income from in the guise of rent.
> We declared this to HMRC in the UK before we left and applied for it to be paid tax free from our management company.
> Since we do not have any other income from the UK I suppose we were granted the income free of UK tax as the annual figure we receive is well below the individual income tax limits or personal tax allowance in the UK - think that is about £7495 although I could be wrong on that figure.
> 
> As part of the Immigration process into NZ individuals are allowed to earn income from overseas for a period of 5 years from the date of arrival free of NZ tax (although this could be classed as the date one entered the country if you came for a visit before emigration!!!).
> Im also sure that you don't have to declare any income from overseas until this 5 years is up then by law you must do - one just has to make sure you have got your 5 year anniversary date correct.
> So in our situation with Permanent Residency we can continue to earn an income from overseas until April 2017 free of NZ tax.
> Not sure if this rule applies to people coming in with other visas.
> As far as I know this "benefit" was introduced by Immigration NZ to assist migrants into the country - an added attraction so to speak




That's really helpful. Thankyou we'll explore that further. One problem may be that my husband is a kiwi. Just me who's the migrant.


----------



## Kristina Andersen

Usually income from land/houses will be taxed in the UK but you may also have to declare and pay tax in NZ . The tax treaty will provide assistance to provide relief from double tax.


----------

