Tax on UK income if you live somewhere else

[Chamon_Lee]

Hope this doesn't sound like a silly question but if someone moved to oman in the middle east (as a UK resident), does any income earned in the UK become tax free.

Example. You have 2 houses, you rent them both out at 2k each, 4k a month as a UK resident would have income tax and NI due on it, would this be 0% if you lived in oman.

[Eric Mc]

Chamon_Lee said:

Hope this doesn't sound like a silly question but if someone moved to oman in the middle east (as a UK resident), does any income earned in the UK become tax free.

Example. You have 2 houses, you rent them both out at 2k each, 4k a month as a UK resident would have income tax and NI due on it, would this be 0% if you lived in oman.

For a start, NI is NEVER due on rental income - no matter whether you are a UK tax resident or not. Tax is NOT NI.

If you are properly no longer a UK tax resident, then you are, in theory, no longer liable to UK tax on your income. To become non-resident for UK tax you must fulfill a number of criteria which you should get professional advice on to see if you satisfy those criteria.

Owning a UK property can complicate matter

There are special rules for overseas landlords. Normally, the landlord needs to appoint an agent to collect the rent from the tenant and most likely, the agent would also be responsible for ensuring the property is maintained.
The agent is also responsible for deducting 20% tax at source from the gross rent and paying that over to HMRC.

Here is HMRC's on-line guidance -

Rental income
You need to pay tax on your rental income if you rent out a property in the UK.

You may also need to pay tax if you make a gain when you sell property or land in the UK.

If you live abroad for 6 months or more per year, you’re classed as a ‘non-resident landlord’ by HM Revenue and Customs (HMRC) - even if you’re a UK resident for tax purposes.

How you pay tax
You can get your rent either:

in full and pay tax through Self Assessment - if HMRC allows you to do this
with tax already deducted by your letting agent or tenant
Get your rent in full
If you want to pay tax on your rental income through Self Assessment, fill in form NRL1i and send it back to HMRC.

If your application is approved, HMRC will tell your letting agent or tenant not to deduct tax from your rent and you’ll need to declare your income in your Self Assessment tax return.

HMRC will not approve your application if your taxes are not up to date, for example you’re late with your tax returns or payments.

Get your rent with tax deducted
Your letting agent or tenant will:

deduct basic rate tax from your rent (after allowing for any expenses they’ve paid)
give you a certificate at the end of the tax year saying how much tax they’ve deducted
If you do not have a letting agent and your tenant pays you more than £100 a week in rent, they’ll deduct the tax from their rent payments to you.

Filling in your tax return
You need to declare your rental income in a Self Assessment tax return unless HMRC tells you not to.

You cannot use HMRC’s online services. Instead, you need to:

send your tax return by post
use commercial software
get help from a professional, like an accountant
You need to complete the ‘residence’ section (form SA109 if you’re sending it by post) and the ‘property’ section (form SA105).

You’ll be fined if you miss the deadline - it’s earlier if you’re sending your return by post (31 October).

If you’ve paid too much tax
You can ask for a refund if both:

your rental income is lower than your Personal Allowance
your letting agent (or tenant) already deducted basic rate tax on it
Fill in form R43 and send it back to HMRC.