OVERSEAS LANDLORDS FACT SHEET

Taxes Management Act 1970

Hamilton Wood recommends speaking to a qualified accountant on all Tax matters but we have listed in brief the following for your information.

For many years managing agents have been required to deduct tax from rent paid to non-resident landlords. However, the rules on how the Act operates have been changed in order to accommodate the introduction of Self-Assessment.

From 6th April 1996 managing agents representing overseas landlords must:

· Deduct basic rate tax from the landlord's rental income.
· Pay the tax to The Inland Revenue

They must do this for each quarter that is for each three-month period ending 30th June, 30th September, 31st December and 31st March.
The amount that must be paid over is calculated from the gross rent received during the quarter minus deductions for allowable expenses paid by the agent on the landlord's behalf. A list of allowable expenses can be found on page five of our brochure.

Receiving INCOME with No Tax Deducted

Landlords can apply to receive their rental income with no tax deducted by completing Inland Revenue application form NRL1. Stocks of this form are kept at Hamilton Wood.

Applications can be made on the basis that:

· The landlords tax affairs are up to date.
· There is unlikely to be a tax liability.
· The landlord has never had a UK tax liability.

In each case the landlord must undertake to comply with all tax obligations. In particular, tax returns sent by The Inland Revenue must be completed and returned promptly and any tax due must be paid on time.

If the landlord's application has been accepted, the Inland Revenue will issue a numbered exemption certificate to Hamilton Wood, lifting the obligation to deduct tax from the rental income at source. It is then the landlord's responsibility to calculate his own tax liability at the end of the tax year, under the self-assessment procedure, and to pay any tax, which is rightly due.

Please not that The Inland Revenue defines the managing agent as the person that collects the rent on behalf of the landlord. Where there is no managing agent the obligation to deduct tax falls on the tenant. Hamilton Wood will advise the tenants of their obligations under the scheme.
Landlords requiring further information should contact the Inland Revenue office which has been set up to administer the scheme. They have published an explanatory booklet, which is available on request from:

The Financial Intermediaries and Claims Office (FICO)
St Johns House Telephone: 0151-472-6208/6209
Merton Road Fax: 0151-472-6067
Bootle
Merseyside
L69 9BB