paying taxes

[JBK]

Our house is currently being rented out for 3 years and we were wondering to which system ( french or english ) do we declare the income for tax reasons. Both my wife and i still live in the UK. Thanks in advance

[Will]

If the house is in France (you don't make that clear) then rental income is declared and taxed in France.

http://www.french-property.com/guides/france/working-in-france/letting-property/taxation/

You should also declare it as part of your worldwide income in UK but because of double taxation agreements it won't be taxed twice.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_10013347

[Pickles]

[quote user="Will"]If the house is in France (you don't make that clear) then rental income is declared and taxed in France.
http://www.french-property.com/guides/france/working-in-france/letting-property/taxation/ [/quote]

And assuming that you are in the UK, you are charged French tax at a flat rate of 20% of the income after allowable deductions (note that you do NOT get the benefit of French personal allowances), unless you can prove to the satisfaction of the Fisc that the French tax rate that would be applicable to your whole world income would be lower, in which case this lower rate will be charged. 

[quote user="Will"]You should also declare it as part of your worldwide income in UK but because of double taxation agreements it won't be taxed twice.
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_10013347 [/quote]

Errr ... to clarify, it will be ASSESSED for tax in the UK alongside all your other income, and HMRC will offset any tax that has been paid in France against any tax due in the UK on that French income. You may still face a tax bill in the UK, particularly if you are in the 40% bracket, but it will be for the difference between the tax paid in France and the tax that would have been due on that amount of income in the UK.

Regards

Pickles

[Will]

Thanks Pickles, that's a good concise explanation. As somebody who pays taxes in both countries I am well aware of the fact that just because something has been taxed in one place it won't affect your total tax liability in another. In view of the way certain people leap on particular conditions or invent situations in order to try and catch us, and the taxmen, out, I just wanted to keep things simple and concentrate on the general principles, providing links for more detailed answers.

[JBK]

Many thanks will, that helps me alot, by the way sorry for not explaining it better, yeah the rented house is in France whilst my wife and me reside in UK.

[JBK]

Thanks pickles for the info, very much appreciated.