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I am interested in buying a Property to Let in the UK what will I be taxed on?

Income tax is charged on net rental income. Expenses are generally allowable if incurred 'wholly and exclusively' for business purposes (e.g. overdraft interest charged to the business account).  Profits and losses from more than one property are generally pooled together, and if an overall rental loss arises it is normally carried forward and set off against future profits.  Losses relating to capital allowances may instead be offset against total income of the same (or next following) year.  Capital allowances cannot be claimed for expenditure on furniture, fixtures and fittings for use in dwelling houses. However, a 'wear and tear' allowance may be claimed instead, equal to 10% of 'net rents' from furnished lettings (i.e. rents less payments that would normally be borne by the tenant, such as water rates). Alternatively, a 'renewals' basis may be claimed, i.e. no relief is given for the original cost of an asset, but a deduction is given for the cost of replacing it.  A deduction from profits may be claimed for replacing fixtures (e.g. central heating or a kitchen) with similar fixtures. However, expenditure on improved versions of those fixtures will generally be capital, and not an allowable deduction for income tax purposes. An exception is the replacement of single glazed windows with double glazed windows, as the expenditure will be regarded as allowable repairs.

If UK property is let by a non-resident, basic rate tax is normally deducted at source from the net property income either by letting agents or (if there is no letting agent) by the tenant, and paid over to the Inland Revenue. However, a tenant paying rent of £100 a week or less is generally not required to deduct tax. In addition, tenants and lettings agents do not have to deduct tax at source if the non-resident landlord agrees with the Revenue to complete a Self-Assessment return (although gross payment does not mean that the rental income is tax-free). .

As you are Irish Domiciled and resident you are liable for tax on your world wide gains.  The net gain allows for the purchase price, costs of purchase, enhancement expenditure indexed and costs of sale, each owner has a personal exemption of €1,270 per year.  Any UK tax paid can be credited against the Irish liability.  The net gain is tax at 20%.

Louise Carey is an Accountant/Tax Consultant based at 32 The Square, Listowel, tel: 068 21109, email:lc@taxconsultant.ie, www.taxconsultant.ie