Declaring UK rental income (not taxed as source in the UK)

[Anne]

Despite living in France a number of years, I still do not find filling in the annual tax forms easy, I hope someone will be able to help!

We have rental income from the UK which we declare in the UK via HRMC self assessment. Because of the tax allowance we currently do not pay tax on this revenue in the UK. Previously we have completed the red form 2047K, however today I spoke to a colleague who advised that it should be declared as taxable income in France via the form 2044 - is this correct?

[Hereford]

No !!  It is not taxable in France, but is put on the tax forms here and is taken into account when tax rate (i.e. bareme) is fixed.

[Chiefluvvie]

Your colleague is correct.

As you are tax resident in France you need to declare your worldwide income in France - just like UK tax residents declare 'foreign non UK' income on their tax returns.....

This income may affect your nominal rate for French income tax purposes. However, due to the current double taxation treaty, you may receive a tax credit in France for any tax paid in the UK - although not relevant in your case.

You may also need to consider the UK's 'Non-Resident Landlord' scheme - see HMRC website.

Chiefluvvie

[Chiefluvvie]

[quote user="Hereford"]No !!  It is not taxable in France, but is put on the tax forms here and is taken into account when tax rate (i.e. bareme) is fixed.

[/quote]

Wrong Hereford - as a French tax resident, UK rental income is most definitely declarable and therefore taxable in France!

Chiefluvvie

[NormanH]

This was answered by parsnips a few days ago in another thread

http://services.completefrance.com/forums/completefrance/cs/forums/2904188/ShowPost.aspx

'

That guide (the Forum sticky on tax forms), although updated in 2011,

is not correct for UK rental income, as can be verified by

looking at the notice to this years 2047 which has , at last,

been updated.

On page 3 sec B 1) b - it

clearly states that the Royaume-Uni  is one of the states whose

"revenus immobiliers"-rents- are exonerated by a credit

equal to the french tax; in other words exactly as the guide 

describes for  government pensions ; 2047 VI and 2042 8TK.

[parsnips]

[quote user="NormanH"]This was answered by parsnips a few days ago in another thread

http://services.completefrance.com/forums/completefrance/cs/forums/2904188/ShowPost.aspx

'

That guide (the Forum sticky on tax forms), although updated in 2011,

is not correct for UK rental income, as can be verified by

looking at the notice to this years 2047 which has , at last,

been updated.

On page 3 sec B 1) b - it

clearly states that the Royaume-Uni  is one of the states whose

"revenus immobiliers"-rents- are exonerated by a credit

equal to the french tax; in other words exactly as the guide 

describes for  government pensions ; 2047 VI and 2042 8TK.

[/quote]

Hi,

      I should expand on the above a little;

Although the rents should not be taxed in France , the way you declare them before the credit is calculated can have a small effect on your tax rate for other income.

      For unfurnished lets under 15 000€ p.a. you can opt for the "micro-foncier" regime by ,in addition to the above,entering the gross rent on 2042 4BE and get a 30% set allowance. (put a note -"voir 8TK").   If you want to claim real expenses you take them off at 2047 VI "charges" and carry forward the rent net of expenses to 8TK.

       If your let is furnished you can declare under micro-BIC on 2042C at 5ND "locations meublées" and get a 50% allowance.

       By declaring in the way that most reduces the "theoretical" taxable sum , you reduce the "revenu fiscal de reference " which may save your other revenues from being taxed at a slightly higher average rate.

 

[Anne]

Thank you all for your responses, it's really appreciated. Unfortunately we are unable to use the 'micro-foncier' as we are above 15 000E.

If I have understood correctly from your comments and the reference to the notes on page 3 of form 2047, I should continue to declare through the table VI and box 8TK even though the revenue has been declared but not actually taxed in the UK.

[Chiefluvvie]

Anne - I get the impression this is a 'mindset' issue for you, whereas it is simply a matter of fact.

You are a French tax resident therefore you must declare your worldwide income in France - no matter what it is, or whether or not it has been previously taxed in the country of receipt.

It's just exactly the same situation for UK tax residents who rent out their holiday homes abroad - they also need to declare this income in the UK. No different.

Chiefluvvie

[parsnips]

[quote user="Anne"]Thank you all for your responses, it's really appreciated. Unfortunately we are unable to use the 'micro-foncier' as we are above 15 000E.

If I have understood correctly from your comments and the reference to the notes on page 3 of form 2047, I should continue to declare through the table VI and box 8TK even though the revenue has been declared but not actually taxed in the UK.[/quote]

Hi,

      That is correct; UK tax has nothing to do with it ; it is declared here to help calculate your french tax rate and is then exempted from french tax by a credit equal to the french tax which would otherwise be due on it.

[Anne]

With reference to it being a mindset - not at all, I want to declare it, just couldn't work out where the correct place was.

[Anne]

Thanks Parsnips

[Chiefluvvie]

Quote :.....If I have understood correctly from your comments and the reference to the notes on page 3 of form 2047, I should continue to declare through the table VI and box 8TK even though the revenue has been declared but not actually taxed in the UK.

Apologies Anne - I misunderstood your question above.....

Chiefluvvie

[Patf]

We are in a similar situation , and have form 2047K sent to us to fill in.

We haven't started yet, but intend to do the same as last year, though the figures are slightly different and we did pay a small amount of tax to HMRC.

[bill]

Thanks Parsnip!

I want to declare furnished UK rental income under micro-BIC on 2042C at 5ND "locations meublées", as you suggested, but I can't find any 2042C on the FISC website!

When I click on 2042C I get 2042CK, which doesn't seem to have any relevant boxes under 4 - Revenus Fonciers, and there's no section 5 at all!

Am I missing something, or has 2042C been replaced by something else?

Cheers, Bill  

[bill]

[quote user="bill"]

Thanks Parsnip!

I want to declare furnished UK rental income under micro-BIC on 2042C at 5ND "locations meublées", as you suggested, but I can't find any 2042C on the FISC website!

When I click on 2042C I get 2042CK, which doesn't seem to have any relevant boxes under 4 - Revenus Fonciers, and there's no section 5 at all!

Am I missing something, or has 2042C been replaced by something else?

Cheers, Bill  

[/quote]

 

PS!   I've just found box 5ND - on form 2042 CK PRO.

But now it says "Ces revenus seront automatiquement soumis aux prélèvements sociaux"!!!

So maybe it's not the best place to declare UK furnished rental income after all.  What would you recommend?

 

Cheers, Bill 

[bill]

[quote user="parsnips"]

       ... If your let is furnished you can declare under micro-BIC on 2042C at 5ND "locations meublées" and get a 50% allowance. ...

[/quote]

 

 

But over box 5ND (on Form 2042 CK PRO) it says "Ces revenus seront automatiquement soumis aux prélèvements sociaux"!

 

So shouldn't one use box 5NJ, or 5KM, to avoid the PS?

 It only mentions gîtes ruraux et chambre d'hôtes, but is there any difference?

 

Or can anyone suggest a more appropriate box to use?

I realise that box TK will ensure that the tax is not charged, but the question is how to avoid the PS!

 

Cheers, Bill. 

[parsnips]

[quote user="bill"]

[quote user="parsnips"]

       ... If your let is furnished you can declare under micro-BIC on 2042C at 5ND "locations meublées" and get a 50% allowance. ...

[/quote]

 

 

But over box 5ND (on Form 2042 CK PRO) it says "Ces revenus seront automatiquement soumis aux prélèvements sociaux"!

 

So shouldn't one use box 5NJ, or 5KM, to avoid the PS?

 It only mentions gîtes ruraux et chambre d'hôtes, but is there any difference?

 

Or can anyone suggest a more appropriate box to use?

I realise that box TK will ensure that the tax is not charged, but the question is how to avoid the PS!

 

Cheers, Bill. 

[/quote]

Hi,

      Copious apologies , I should have said box 5NP in the

section below.  Although it says "prestations de service" that is the

correct section according to french tax guides

[frexpt]

Please excuse me if I jump into this thread with a slightly different set of circumstances......

My wife and I are on the point of informing the UK Inland Revenue that we are retiring here permanently. Apparently we will not have to complete a P85 as we will remain within self assessment.

We have a portfolio of rental properties in the UK that provides a significant gross income, but which is written down by 60% (finance costs and other expenditure) for our UK self assessment.

My concern is if a French tax return asks for gross rental figures, what will actually need to be produced in support of the figures we enter on our first French tax return to ensure that the return reflects what we actually have to live on.

[parsnips]

[quote user="frexpt"]Please excuse me if I jump into this thread with a slightly different set of circumstances......

My wife and I are on the point of informing the UK Inland Revenue that we are retiring here permanently. Apparently we will not have to complete a P85 as we will remain within self assessment.

We have a portfolio of rental properties in the UK that provides a significant gross income, but which is written down by 60% (finance costs and other expenditure) for our UK self assessment.

My concern is if a French tax return asks for gross rental figures, what will actually need to be produced in support of the figures we enter on our first French tax return to ensure that the return reflects what we actually have to live on.[/quote]

Hi,

    French form 2047 (Foreign Income) sec VI, has provision to deduct expenses ("charges") before transferring the rent, net of expenses to form 2042 box 8TK ,which ensures that the rents are not taxed in France , but are taken into account to calculate your french tax rate on other income.

    You can download these forms for information at www.impots.gouv.fr.  If your figures are questioned (unlikely) then copies of your UK tax documents should be accepted.

[bill]

[quote user="parsnips"][quote user="bill"]

[quote user="parsnips"]

       ... If your let is furnished you can declare under micro-BIC on 2042C at 5ND "locations meublées" and get a 50% allowance. ...

[/quote]

 

 

But over box 5ND (on Form 2042 CK PRO) it says "Ces revenus seront automatiquement soumis aux prélèvements sociaux"!

 

So shouldn't one use box 5NJ, or 5KM, to avoid the PS?

 It only mentions gîtes ruraux et chambre d'hôtes, but is there any difference?

 

Or can anyone suggest a more appropriate box to use?

I realise that box TK will ensure that the tax is not charged, but the question is how to avoid the PS!

 

Cheers, Bill. 

[/quote]

Hi,

      Copious apologies , I should have said box 5NP in the

section below.  Although it says "prestations de service" that is the

correct section according to french tax guides[/quote]

 

Thanks Parsnips, but that raises a couple more questions!

 

5NP assumes Régime micro enterprise and I believe that means that the FISC will automatically deduct 50% to cover expenses, so the income should be declared gross in 5NP and 8TK.  Is that correct?

 

Anyway, I don't think we would qualify as a micro enterprise, so the alternative is the Régime du bénéfice réel in which case the income should be declared nett in 5NC or 5NI, and 8TK.  Correct?  But what difference does it make using 5NC or 5NI?  (The Fiche de Calculs Facultatifs seems to imply on page2, section 4 that 5NI would increase the income by 25% !)

 

Finally, could a couple jointly owning two properties qualify as two micro enterprises, by declaring the income from one property each? 

 

Cheers, Bill

[frexpt]

[quote user="parsnips"][quote user="frexpt"]Please excuse me if I jump into this thread with a slightly different set of circumstances......

My wife and I are on the point of informing the UK Inland Revenue that we are retiring here permanently. Apparently we will not have to complete a P85 as we will remain within self assessment.

We have a portfolio of rental properties in the UK that provides a significant gross income, but which is written down by 60% (finance costs and other expenditure) for our UK self assessment.

My concern is if a French tax return asks for gross rental figures, what will actually need to be produced in support of the figures we enter on our first French tax return to ensure that the return reflects what we actually have to live on.[/quote]

Hi,

    French form 2047 (Foreign Income) sec VI, has provision to deduct expenses ("charges") before transferring the rent, net of expenses to form 2042 box 8TK ,which ensures that the rents are not taxed in France , but are taken into account to calculate your french tax rate on other income.

    You can download these forms for information at www.impots.gouv.fr.  If your figures are questioned (unlikely) then copies of your UK tax documents should be accepted.

[/quote]

 

Thank you.  That is very helpful and encouraging!  Although the rental income, less expenses, aggregates on the French tax return to determine any rate paid on other income, am I right in believing that our UK rental income, being taxable in the UK, does not attract Social Charges in France?

[parsnips]

[quote user="bill"][quote user="parsnips"][quote user="bill"]

[quote user="parsnips"]

       ... If your let is furnished you can declare under micro-BIC on 2042C at 5ND "locations meublées" and get a 50% allowance. ...

[/quote]

 

 

But over box 5ND (on Form 2042 CK PRO) it says "Ces revenus seront automatiquement soumis aux prélèvements sociaux"!

 

So shouldn't one use box 5NJ, or 5KM, to avoid the PS?

 It only mentions gîtes ruraux et chambre d'hôtes, but is there any difference?

 

Or can anyone suggest a more appropriate box to use?

I realise that box TK will ensure that the tax is not charged, but the question is how to avoid the PS!

 

Cheers, Bill. 

[/quote]

Hi,

      Copious apologies , I should have said box 5NP in the

section below.  Although it says "prestations de service" that is the

correct section according to french tax guides[/quote]

 

Thanks Parsnips, but that raises a couple more questions!

 

5NP assumes Régime micro enterprise and I believe that means that the FISC will automatically deduct 50% to cover expenses, so the income should be declared gross in 5NP and 8TK.  Is that correct?

 

Anyway, I don't think we would qualify as a micro enterprise, so the alternative is the Régime du bénéfice réel in which case the income should be declared nett in 5NC or 5NI, and 8TK.  Correct?  But what difference does it make using 5NC or 5NI?  (The Fiche de Calculs Facultatifs seems to imply on page2, section 4 that 5NI would increase the income by 25% !)

 

Finally, could a couple jointly owning two properties qualify as two micro enterprises, by declaring the income from one property each? 

 

Cheers, Bill

[/quote]

Hi Bill,

 Sorry to keep piling on the quotes but I can't seem to post any other way..

  If you don't qualify for micro-BIC , then don't use form 2042C at all ; just put your gross rents on 2047 VI take off your expenses under "charges" , and transfer the net to 2042 box 8TK.   

 In France it is the foyer fiscal which is taxed , not the individual, so you can't declare anything separately.