Q & A

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I have just moved to the UK from Spain to take a permanent job and am renting out my Spanish home. I have a Spanish "estate agent" who manages this and pays whatever is left to my UK bank account. I have no immediate plans to return to Spain but would like to keep the property just in case. I am not sure what I need to do about tax or what expenses I can claim against the income from my Spanish house and would be grateful for your advice.

You will need to complete a Tax Return in Spain as a non resident with Spanish source income and will need to appoint a suitably qualified individual to do this. You will also be liable to UK tax on profits derived from your rental property. The expenses you are able to claim against your income are as follows:

  • Repairs made to the property
  • Fees of the "estate agent" for managing the property
  • Any utility bills you pay in respect of the property
  • Flat rate Spanish taxes equivalent to UK council tax etc.
  • Interest paid on servicing any debt arising from the purchase of the property or improvements thereon to the extent that the outstanding debt does not exceed the original purchase cost of the property.

There may be other more obscure costs we can claim depending on your personal circumstances but these are the main areas. You can also claim foreign tax credit relief on the Spanish tax you pay to the extent that it does not exceed the UK tax payable on the profits.

I am a worker on a fixed gas installation in designated block 49/26 of the Southern North Sea some 55km off the North Norfolk Coast. I am a UK resident. A number of
people on board have recently and successfully claimed tax rebates covering the past 5 years, some of which are significant sums of money.
Their accountant claims we are in international waters and therefore claiming foreign earnings deductions and quoting "seafarers". I would be looking to make a claim and therefore look to you for guidance in the first instance.

Seafarers. This allowance is quite clearly only available for workers on a ship capable of navigation and used in navigation.
HMRC website (ref EIM33101) points out that structures that do not normally move about are not generally regarded as ships as they are not used in navigation. You refer to the location of the fixed installation;, so that would rule us out from claiming a seafarers earnings deduction for you.

Abroad. There is a general 100% allowance for earnings abroad under the non residence rules, if (and I am paraphrasing a lot of complex legislation) you work abroad for at least one full tax year, you return to the UK for no more than 183 days in any one year or 91 days a year on average during your absence. Before looking at your days abroad, we have to identify whether you are abroad. The legislation says that all UK territorial waters (including the UK section of the continental shelf) are in the UK for all tax purposes.

Now I am no expert, but I guess you and the managers aboard your platform will be, so if block 49/26 is in the UK section of the North Sea then, in my opinion, you and your colleagues are liable to all UK taxes ie Income Tax (PAYE) and NI.

It seems to me that the rebates claimed by your colleagues are very unlikely to be due and the people who have claimed them could be liable to fines of up to 100%.

My wife and I are US citizens and are considering retiring to the UK. We have a large share portfolio and a number of pensions in the US. We were wondering what our tax position in the UK would be?

The first point to note is that, being US citizens, you would not be entitled to a UK personal allowance.

There are two ways in which we can assess your taxable income, the remittance basis or the arising basis.
Under the remittance basis, only income brought into the UK is taxable where under the arising basis, income is taxable as it arises in any country. Normally use of the remittance basis carries a £30,000 charge for non domiciled individuals but as you will have been resident in the UK for less than 7 of the preceding 9 tax years the charge does not apply.

The above however does not apply to US pensions. Under the UK/USA double taxation treaty, these are only and fully taxable in the UK regardless whether or not you remit the income. You will still need to complete a US Tax Return excluding the pensions and you will be able to claim foreign tax credit relief on any dividend income remitted to the UK.

For 5 years I have been non resident in the UK, working / resident in the UAE, only visiting home for 30 odd days per year for holidays. I completed the relevant forms when leaving the UK to inform the tax office of my status. I now have an offer of work on a drill ship which does not come under the seafarer rules, although it is based in west Africa. The company is international with little or no buisness in the UK. The rotation is month on month off. Can I maintain my non resident status by simply staying in the UK less then 91 days per year? My wife and children will be living in the UK, which I know can show I am resident there.

Your UK tax situation is no different to if you were working on shore in West Africa. The releveant legislation here is that relating to persons working overseas. Provided you are working overseas over a complete tax year for the new contract you will again be non resident. If your new contract does not span a complete tax year, HMRC reserve the right to review your non resident status.

You cannot visit the UK for more than 91 days on average, or 183 days in any one year, whilst you are non resident under the overseas employment rules.

You are quite right that maintaining a home, wife and child in the UK can scupper any hope of claiming non residence. However this is really only an issue for businessmen who maintain substantial UK or worldwide business interests, such as Messrs Gaines-Cooper or Philip Green.
Provided your main source of income is your overseas employment I would not see this as being an issue for you.

Even as a non resident you will be liable to UK taxation on income (such as rental income) arising in the UK. However, if you are a UK citizen and passport holder, you are entitled to a full personal allowance each year, which you can set against your UK income.