# UK tax on foreign rental



## KristenJune (Oct 8, 2016)

My house is rented in the USA and that income has been declared on my US taxes and paid. Money stayed in the States. Now I need to complete my UK taxes / self assessment. 

I need to declare my rental income but do not want to be double taxed here in the UK.
How do I cover this on my UK tax assessment?

Thanks


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## iota2014 (Jul 30, 2015)

You need the Foreign Pages, on which you can report the income and claim credit for the US tax paid. 

See https://www.gov.uk/government/publications/self-assessment-foreign-sa106


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## KristenJune (Oct 8, 2016)

Thanks iota2014.


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## KristenJune (Oct 8, 2016)

Having read Sa106.
Because the reporting tax year between the US and UK is different , how do I report to HMRC the US tax 'paid' on income period Dec 31 to April 5th 2017 when its not been reported to the IRS yet and I do not know what my tax commitments will be?


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## JustLurking (Mar 25, 2015)

KristenJune said:


> Because the reporting tax year between the US and UK is different , how do I report to HMRC the US tax 'paid' on income period Dec 31 to April 5th 2017 when its not been reported to the IRS yet and I do not know what my tax commitments will be?


The UK's silly tax year timings are a perennial pain in the rear.

The deadline for filing UK self-assessment for 2016/17 is Jan 31 2018. If you can complete your US tax return before the end of Jan 2018, and also have your UK return all but done by then too, that gives you a small but sufficient window to slot the final foreign tax credit figure into the UK return. There's not a lot of slack in this, but I've done it successfully in the past without it being massively stressful. This probably means you have to prepare your own returns, though. It's unlikely that any US tax preparer is going to work to those deadlines.

If that's infeasible you can complete UK self-assessment with your best 'provisional' foreign tax credit figure, and then amend later if required. If you use HMRC's own online self-assessment then amending a filed return is trivial and your tax due/refunded is adjusted straight away. Changing a return like this is rumoured to be an audit red-flag but there don't seem to be many reports of this actually happening, so that could just be HMRC scare tactic.


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## Moulard (Feb 3, 2017)

Fundamentally most foreign tax credit / offset rules require you to have either paid or assessed the foreign taxes before being able to take a tax credit "domestically" -- in your case the UK. 

I assume the UK follows this approach, but am happy to stand corrected.

This means that the tax years and tax credits never actually line up... but that really doesn't matter you only pay US taxes on one date, and that you report that on your UK returns based on the tax year that date falls within.

So for example... you file your US return in in October 2017 (having taken full advantage of US extension rules) for the 2016 US tax year. Next in April 2018 you file your 2017-18 UK tax return. You paid US taxes during that period, so you can claim the tax credit for taxes paid, even though the taxable period in the US is entirely outside the UK tax year.


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## iota2014 (Jul 30, 2015)

KristenJune said:


> Having read Sa106.
> Because the reporting tax year between the US and UK is different , how do I report to HMRC the US tax 'paid' on income period Dec 31 to April 5th 2017 when its not been reported to the IRS yet and I do not know what my tax commitments will be?


You have a full year to amend your 2016/17 return. See https://www.gov.uk/self-assessment-tax-returns/corrections



> If you need to make a change to your tax return after you’ve filed it, for example because you made a mistake, either:
> 
> * update your return within 12 months of the original deadline
> 
> ...


Thus you should amend your 2016/17 return by 31 Jan 2019. But of course you can just do it as soon as you have your final numbers up to April 2017.

It's very easy to amend the return if you file online. Takes five minutes, once you've familiarised yourself with the system. And there's nothing risky or scary about it - if you make a mistake just do it again.


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## iota2014 (Jul 30, 2015)

I said it's very easy online - one complication: SA106 pdf form is not fillable, or wasn't last year. You can either work round this, or opt to send SA106 by post.

I opted to convert the SA106 to a fillable form using the Adobe Fill&Sign app, then I filled it and attached it to my return online.


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## JustLurking (Mar 25, 2015)

Moulard said:


> This means that the tax years and tax credits never actually line up... but that really doesn't matter you only pay US taxes on one date, and that you report that on your UK returns based on the tax year that date falls within.


The problem with this is that there may not be enough foreign income in a given UK tax year on which to claim foreign tax credit for US tax _paid in that year_ but in respect of US income _received in a previous_ year. Sell the house, say, and the US income dries up but the final trailing tax payment remains. In common with most countries, the UK only allows foreign tax credit against _current_ year income.

The filing early approach I gave works best if US tax is being withheld, ideally -- and usually -- over-withheld. In that case you're in effect "under-claiming" foreign tax credit, but in reality avoiding over-claiming followed by a corrective amendment later on to arrive at the precise same point. Just less work all round.

Otherwise, filing UK 'provisional' figures and then correcting later when the final US tax figure is known is the right way to go. Changing a UK tax return online through HMRC's own self-assessment is relatively easy. Certainly far simpler than the 1040X nonsense that the IRS has in place.

Of course, it would all be much better if the UK could only change its tax year to match most of the rest of the planet.


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## Moulard (Feb 3, 2017)

> Of course, it would all be much better if the UK could only change its tax year to match most of the rest of the planet.


Or even better still the IRS could allow individuals to use Form 1128 to change their tax year to align with the tax year of their place of residence. 

There is lots of variation out there in Fiscal years...

https://en.wikipedia.org/wiki/Fiscal_year


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## nikkisizer (Aug 20, 2011)

JustLurking said:


> If you use HMRC's own online self-assessment then amending a filed return is trivial and your tax due/refunded is adjusted straight away. Changing a return like this is rumoured to be an audit red-flag but there don't seem to be many reports of this actually happening, so that could just be HMRC scare tactic.


It is not a scare tactic, it is an audit red-flag.


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## JustLurking (Mar 25, 2015)

nikkisizer said:


> It is not a scare tactic, it is an audit red-flag.


Citation or other source, please.


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