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UK rental income


slowfox05
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Section six is to claim a tax credit against income already declared so yes

So pension income declared section 1 - if public claim credit section 6

rental income declared section 4 - claim credit section 6

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Thanks David, think we've got that now!  Good use made of a wet day, both French and UK tax returns done for another year.

For anyone else following this post, for us the big step was ticking the micro foncier box as our rental income was significantly less than €15 000.

2042: UK Box 1AL Government pension (gross), Box 1AM UK state pension, Section4 Micro foncier Box 4BE and 4BK UK rental profit (gross), 8TK this should fill in automatically from the total of 1AL and 4BE

2047: Section 1/11 UK state pension, Section 6 UK rental income and UK government pension.

We think this is correct, fingers crossed.

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I thought micro fonciere only applied to income from rentals in France. Could be wrong, Parsnips will know.

We have a UK rental and during our years in France I always deducted expenses etc giving a net figure. And entered a 'notional' UK tax deduction opposite. Because I didn't fill the UK return until the following Jan. so didn't know the exact tax figure.
TG never had any problems or queries.
I got the impression that once you got the first tax year over you were ok as long as there weren't any major changes, and your income wasn't in the 'wealthy' class.

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I don't know about the micro fonciere. I picked that up from what slowfox5 said above about UK rentals. Our rental income is too great to need to look more closely at that in any event.

This Année Blanche is starting to make my head hurt. I can see why the information is being asked for, but cannot find a definitive guide on what numbers need entering and where?
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We've gone "micro foncier" for the first time as well, having been prompted to by the Impots adviser. As a pp said, I've been under the impression that it was only for French rentals, but having looked around a bit it seems quite common for Brits to use it to declare UK rental income under the 15K threshold. Fingers crossed.

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What difference does it make? We rent out 1 UK property and I've never ticked micro fonciere. When I had my forms checked a couple of years ago because I thought I'd made a mistake-the lady in the impot never mentioned it to me.
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I was told two weeks ago on this forum that you have to pay tax on rented property in the country that the property is in. Therefore there really isn't any need to declare it anywhere else and I can't see it matters or that there is any reason why you should.

Following on from that question I contacted an accountant in the UK (the property concerned is in France and my Father is now UK resident) who put it simply that if your paying tax on the income in France don't bother putting it on the UK tax form unless asked by UK tax office because it won't make any difference to the amount of tax etc. by father would pay there.

One must therefore assume what with the dual taxation treaty that the same applies the other way round.
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But I thought it did make a difference because it decides which tax band your income is taxed in-therefor although you technically don't pay tax on already taxed income it may push you into a higher tax bracket. Or have I got that wrong? Also doesn't income from another country count when deciding social charges/cotisations and the such like?
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Mac - that's what I think. The french want to know your worldwide income, whether taxed in France or not. And that's why they also ask for details of all bank accounts.
ps one year early on a lady in the tax office insisted that UK rentals should be taxed in France.
I disagreed and she got out the big book of rules, and eventually agreed with me.
I should add that all my tax info comes from these forums, and especially from Parsnips.

I

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Yes, worldwide income definitely dictates which band you fall in for any tax payable in France. Last year, we had to pay some tax at 30% in France, even though our income chargeable here is no more than 10000€.
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I have a question or two about UK rental income:

1) We started renting out a property in the UK in Jan 2018. I've read elsewhere that the french tax authorities like us to use the figures from the UK tax assessments, so for the french tax return do I just use the figure from my UK tax 2018 assessment (i.e Jan - 5/4/2018)? I'm concerned because this would only be 3 months whereas if done on an actual basis for the 2018 French tax year it would obviously be 12 months. I have worked it out exactly on a month by nonth basis so have the twelve month figures but am now wondering what I should do.

2) My annual gross rent would normally be more than €15,000 (although the net profit is less than €15,000) so where do I declare this on the french tax form, which form and which boxes?

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Form 2044 and 2047K as well as your 2042K.

You will need to show the gross 12 months rent with a breakdown of what you can claim against that on pages 2, 3 and 4 the 2047K. Those figures are carried forward to the other two forms.

The first year we took advice and had the forms completed for us, but since then, I have followed the original template, from the copy I kept.
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Agree with all that's been said, but regarding form 2044, our French accountant used to simply put down the net rental profit rather than all the detail of rental income and allowable expenses. The figures used did relate specifically to the French tax (i.e. calendar) year, and it is irrelevant whether or not UK tax has already been paid (or ever will be) on the income. Even though we have a number of UK rental properties, only one composite rental profit figure was used on the 2044, split as appropriate between Mrs DD and I (the figures are different for each of us because of ownership arrangements) on 2047K. Furthermore, our accountant simply listed 'Royaume-uni' as the property address, no more detail.

At the end of the day, the French tax authorities simply need to know a UK rental profit figure to use as a basis for your French tax banding and subsequent rebate, which is calculated proportionally, in the ratio that the UK property income relates to all declarable income.

As regards the Année Blanche, at the end of form 2044 it clearly says that income from properties situated overseas, where there it a right to an French income tax credit, are excluded. UK property income of course falls into this category, so the Année Blanche boxes should be left blank.....
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As you do Daft Doctor, I also just enter net rental profit. I've never entered the various allowances eg fees, insurance, repairs, mortgage interest etc on the french form.

We do enter those on our UK tax return though.

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I have been wrestling with this for a while now.  I have followed Parsnips, and on a different forum he says :-

Quote

Thank you Parsnips, a little more complicated than I thought. Could

you advise me further I have no tax liability in the UK. Gross rental

income before, ground/service rents, agents fees, expenses etc: Eur.9961

net rental income Eur.4991 Form 2047: Section 4 & 6 Is that the

gross amount, before deductions for costs and associated expenses? GROSS -(it says so on the form)  ,

Form 2042: 4BE = gross amount ? YES

4BK = net amount or deductions? With your gross you are entitled

to a special treatment which gives a set deduction of 30% for expenses,

without filling any other forms ; if you opt for real expenses you are

commited to that for 3 years and have to complete a set of forms – given

that these rents will ultimately  be exempted from french tax , i

suggest you go for the 4BE ,4BK route. Both GROSS.

8TK = ?????- Same figure as 4BK.

This is my first year of rental income, so perhaps next year it will be a little easier for me. Thanks again for your time.

Unquote.

From this I understand that for properties rented in the UK for less than 15,000 Euros per year Gross, the following boxes should be completed, but I may be wrong.

A) No UK tax paid on rental income.

2047 - Section 4 - enter gross rental income for the 12 month calendar year.

2047 - section 6 - do not complete as no tax has been paid in the UK.

2042 - Micro foncier - 4BE Gross income

2042 - Micro foncier - 4BK - Gross income

2042 - 8TK - Gross income.

B) UK tax paid on rental income.

2047 - Section 4 - enter gross rental income for the 12 month calendar year.

2047 - section 6 - complete this section with gross figures to get a tax credit in France, thus no double taxation.

2042 - Micro foncier - 4BE Gross income

2042 - Micro foncier - 4BK - Gross income

2042 - 8TK - Gross income.

This is just my understanding and I may be wrong.  I would welcome any and all comments as I am slowly sinking in paper work which I am not good at at all!!

David

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Haven't looked at all your boxes, etc in detail, but as I said in my previous post, it is irrelevant whether or not you have paid UK tax on the rental income or ever will do so. Under the dual tax treaty it is only relevant that it the rental income is taxable in the UK to get a proportional rebate on your French tax. You should therefore complete the forms on the same basis, irrespective of whether UK tax has been paid. Also, I have been doing these returns for Mrs DD & I for 8 years now, helped initially by a French accountant. In my opinion, you should keep it as simple as possible and just enter net figures everywhere rather than separating income and expenses. You will have the necessary information and documentation to supply if requested, but you won't be........

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Thank you Daft Doctor for your helpful reply.  However, I do wonder if we are talking about different matters.

My post related specifically to micro foncier  where the gross rental income is less than 15,000 Euros.  In this system there is no form 2044 or annee blanche, and expenses are granted at 30% without needing to claim detailed expenses.

Further, I was told by the UK tax authorities that as I am a French tax resident, my UK rental income was not subject to UK tax, but that I had to declare it in France as it was definitely subject to French tax.

I am not sure if my suggestions as to which boxes to complete are correct, and I would welcome any comments for micro foncier box entries.  Re-reading this thread I see that frexpt also mentions using the gross rental figure, and then claiming expenses.  However, Parsnips says to use gross throughout as the micro foncier automatically deducts 30% for ecpenses.

Any thoughts welcome.

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"In my opinion, you should keep it as simple as possible" - that's my view too D.D. The french tax people are probably as confused about the subject as we are (as I said earlier, our lady had to look it up.)

And try to stick to the same system each year. They expect some variation , due to exchange rate changes, business ups and downs etc.

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I think that you need to speak to someone else at HMRC, because that is a live link and it states that you have to pay tax on UK rental property if a non resident landlord, and I would add, if eligible as if it is only a very small income, you may not have to pay anything.

I had to look into this at one point before we moved back and knew that that had been the case then, and apparently still is.

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