Question:
I live in Italy and rent out my previous residence in the UK to tenants and as I am tax resident in Italy, the Italian tax authorities charge me income tax on my UK rental income. There is no personal allowance in Italy for rental income, only employment income, therefore I pay tax on my full UK rental income despite the fact that I have no employment income. As the property is in the UK, is there a way I can claim the UK personal allowance against this rental income?
Arthur Weller replies:
All European Economic Area (EEA) nationals are eligible to claim the UK personal allowance, against both employment and rental income. I presume you are a national of the UK or Italy, so you are included in this category. If you have no other UK income, and your net rental income is within the UK personal allowance of £10,000, then you have no UK tax liability. If more than £10,000, then you will be taxed on the excess. Since the property is situated in the UK, the UK should have first rights to tax, and the Italian authorities should give you double tax relief for the tax paid in the UK against your Italian tax liability. See
www.hmrc.gov.uk/manuals/dtmanual/DT10161.htm.
I live in Italy and rent out my previous residence in the UK to tenants and as I am tax resident in Italy, the Italian tax authorities charge me income tax on my UK rental income. There is no personal allowance in Italy for rental income, only
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