Is My Rental Income in Italy Taxable in The UK?

Hello to you all,

The start of another week, so I thought to get everyone motivated I would do an article on rental income taxation!!

Please note I am not a tax expert and you should always consult your accountant/financial advisor, when it comes to tax or any financial decision.

This information will hopefully be useful to you, providing you with guidelines, helping you work out your rental plans when the time comes.

Here goes - if you pay tax and are a resident in the UK you must inform the authorities of any rental income gained from overseas property lettings. This can be found on the foreign pages of your Tax return. ( found on a PDF below)

Contrary to popular belief you need to pay this even if you are paying tax in Italy. The UK tax authorities will assess this and credit you back accordingly.


How much you pay depends on whether you're 'resident' in the UK and 'ordinarily resident' or 'domiciled': Here is how they define these terms

Resident


if you're in the UK for 183 days or more in a tax year, you're a 'resident' for that year for tax purposes

if you come to live in the UK permanently or to remain for three years or more you're resident from the date of arrival
you're also treated as resident if you're in the UK for an average of 91 days or more in a tax year (worked out over a maximum of four consecutive tax years)


Ordinarily resident


if you're resident in the UK year after year you will normally be treated as 'ordinarily resident'
you're treated as ordinarily resident in the UK from the date you arrive if it's clear that you intend to stay for at least three years


Domiciled


your domicile is normally acquired at birth but domicile is a general law concept, decided by a range of factors
You can be more than one of these - or none.

Ok so Whats Deductible - what counts?


You can deduct the same expenses and allowances from overseas property letting income as from UK property letting income, including travel costs. (The expenses must be solely for running your property letting business.)

Expenses and allowances on income from property

Profits and losses from different overseas properties


Because all overseas property lettings are treated as a single business, losses from one overseas property are automatically offset against profits from the others. And if you make a loss overall, you can offset it against future years' overseas rental profits.
But UK and overseas letting businesses are taxed separately - losses from one can't be offset against the profits from the other.

Download the foreign pages for your tax return (PDF document, 73K) Opens new window

Help with completing the foreign pages of your tax return (PDF document, 187K) Opens new window

This should be a starting point for you, don´t forget to register your email in the top right hand box as I will be publishing information on EVERY subject relating to owning and staying in Calabria.

Information Source: DirectGov