Walton
Residential SW1, SW3, SW5, SW6, SW7, SW8, SW10, SW11, SE1, E1, EC1, EC2, EC3,
EC4, E14 areas
The Finance Act 1995 and Taxation
of Income from Land (Non-Resident) Regulations 1995
Both
the Letting Agent (or Tenant where there is no Letting Agent) and the overseas
Landlord are obliged and responsible to deduct tax from the rental income.
Letting
Agents are required BY LAW to withhold tax from rental income until an approved
number is received from the Inland Revenue. Each individual will require a separate
Approved Number, so in the case of a couple jointly owning a property, even a
husband and wife will need a separate approved number. The Letting Agent is required
to:
- Register with the Inland Revenue details of
ANY Landlord (and property) for whom the agent had received income during the
year, along with details of the gross income for each.
- Account for and pay over quarterly, tax at the current rate on the net rent less
allowable expenditure within 30 days of each quarter end for Overseas Landlords
(i.e. non residents).
- Forward to the Inland Revenue
an Annual Statement detailing income and expenditure and showing the payments
made to the Inland Revenue on behalf of each Overseas Landlord by the 5th of July
each year.
- Issue to the Landlord a certificate
in a prescribed form stating the tax payable for the year according to the returns
submitted by 5th of July each year.
The Landlord
can apply for an Approval Number from the Inland Revenue whereby rental payments
may be made to them without tax being deducted, subject to the submission of an
Annual Statement of income and expenditure and the net tax liability to the Inland
Revenue. ONLY Landlords can make the application. The Agent can only pay rent
to the landlord gross to the landlord on receipt of a letter of exemption, detailing
the approval number, direct from the Inland Revenue.
The
Inland Revenue will impose the following conditions on the Landlord before issuing
the Tax Exemption Certificate:
- The Landlord's
UK Tax liabilities must be up to date
- The Landlord agrees
to fully comply with the requirements of Self-Assessment *
- Failure
to comply with any of these conditions will result in the Inland Revenue withdrawing
the exemption, following which Walton Residential will be instructed to commence
withholding tax from the date of receipt of notice of withdrawal.
We
can provide you with the necessary application form.
*
Under Self-Assessment, taxpayers are required to calculate their own tax liability
and submit figures to the Inland Revenue directly or via their tax adviser. The
Inland Revenue can provide an information pack and guidance notes to assist you
in this matter.
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