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French rental income on UK tax return

Financial discussion for any financial queries for Expats
Deweyman777
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Joined: October 5th, 2021, 9:14 pm

French rental income on UK tax return

#448172

Postby Deweyman777 » October 5th, 2021, 9:24 pm

Hello everyone,

I’m a newby so apologies if this is in the incorrect section.

I’m a UK resident with a property in France that is let for approximately 10-12 weeks a year. I have a French accountant who completes my French tax return. I pay very little if any tax in France through that tax return as everything is offset.

I am now completing my UK tax return for the first time since letting my French apartment. Do I need to declare my French income, even though I have declared it in France and submitted a French tax return? I believe there is a dual taxation agreement between the UK and France but I can’t find much information on this.

If anyone can offer any advice or assistance I would be most grateful.

DM777

Lootman
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Re: French rental income on UK tax return

#448178

Postby Lootman » October 5th, 2021, 9:38 pm

Friend of mine has a rental property in Spain. He declares all the income there, as you do in France. He chooses not to declare it in his UK return.

That is almost definitely not correct, technically. The income should be declared in both locations and then the provisions of the tax treaty applied. However if no tax would be due in the UK anyway, under that very same tax treaty, then I imagine that the penalties for omitting it would be trivial.

Now when the property is sold, that is a whole other thing. And such a future sale might then prompt HMRC to tale a look at this property that they formerly knew nothing about. That might be less of a problem if you eventually relocate to France.

But as far as i know there is no obligation to disclose ownership of overseas assets to HMRC. Only income deriving from it subject to the double taxation protections of tax treaties.

Deweyman777
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Joined: October 5th, 2021, 9:14 pm

Re: French rental income on UK tax return

#448181

Postby Deweyman777 » October 5th, 2021, 9:53 pm

Many thanks for the reply Lootman. I’m a big believer in keeping HMRC onside if I can!

My confusion (and lack of understanding) stems from the joint taxation agreement. For example, if I have paid zero tax in France through my French tax return, will HMRC just accept this? Or will they take my French rental income as income for UK tax purposes.

I’ll try and dig around a bit more….

I should add I would not relocate to France. The plan is to sell the property in 20-25 years.

Lootman
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Re: French rental income on UK tax return

#448185

Postby Lootman » October 5th, 2021, 10:08 pm

Deweyman777 wrote:My confusion (and lack of understanding) stems from the joint taxation agreement. For example, if I have paid zero tax in France through my French tax return, will HMRC just accept this? Or will they take my French rental income as income for UK tax purposes.

The expenses that you can offset against rental income in France may be different from the UK rules.

So I would think that you have to go through the process and computations separately to answer that. All I know is that any tax you have to pay to France should be deducted from your UK tax liability for the same income. So that you never pay more tax, in total, than the higher of the two liabilities.

bluedonkey
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Re: French rental income on UK tax return

#448263

Postby bluedonkey » October 6th, 2021, 12:10 pm

Lootman wrote:
Deweyman777 wrote:My confusion (and lack of understanding) stems from the joint taxation agreement. For example, if I have paid zero tax in France through my French tax return, will HMRC just accept this? Or will they take my French rental income as income for UK tax purposes.

The expenses that you can offset against rental income in France may be different from the UK rules.

So I would think that you have to go through the process and computations separately to answer that. All I know is that any tax you have to pay to France should be deducted from your UK tax liability for the same income. So that you never pay more tax, in total, than the higher of the two liabilities.

Yes, that's correct. Just to emphasise, the French rental income and expenses do have to be declared on your UK tax return. (I'm assuming that you are UK resident and UK domiciled.)

Deweyman777
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Joined: October 5th, 2021, 9:14 pm

Re: French rental income on UK tax return

#448267

Postby Deweyman777 » October 6th, 2021, 12:29 pm

Ok many thanks chaps. Further research suggests there is quite a bit of comparing notes between countries, so i shall declare all on my UK tax return. And yes I’m UK resident and live here.

TUK020
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Re: French rental income on UK tax return

#455523

Postby TUK020 » November 4th, 2021, 10:37 am

Deweyman777 wrote:Ok many thanks chaps. Further research suggests there is quite a bit of comparing notes between countries, so i shall declare all on my UK tax return. And yes I’m UK resident and live here.

Also, it is worth understanding your future Gapital Gains tax exposure. I do not have a current understanding of this, but my dad had a major whinge about letting his French property changed the status of his CGT exposure (this was more than 20 years ago).


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