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Sep 09, 2016

Tax Example: Rent


NON-RESIDENT COUPLE (FROM AN EU/ COMMONWEALTH TERRITORY)
Non-resident couple΄s joint rental income1 €1,500 €6,000 €12,000
Monthly Rental Income2 1,500 6,000 12,000
Annual Rental Income 18,000 72,000 144,000
Less Personal Allowance3 (14,904) (14,904) (14,904)
Less Costs4 (4,054) (16,270) (32,830)
Less Depreciation5 (1,800) (7,200) (14,400)
= Taxable Income – 33,626 81,866
Income Tax6
Up to GBP2,150 10% – 636 636
GBP2,150 – GBP33,300 22% – 5,998 16,620
Over GBP33,300 40% – – –
Annual Income Tax Due – €6,634 €17,256
Tax Due as % of Gross Income nil 9.21% 11.98%
Source:
Global Property Guide research

Notes


1 The property is jointly owned by husband and wife, but then taxed separately.

2 Exchange rate used: 1 EUR = 0.738667 GBP

3 Personal allowance for each taxpaper is GBP 5,035 (€ 3,719 ) for 2007.

4 Estimated costs. Actually incurred expenses such as letting fees, maintenance and repairs, lawyer΄s fees, professional fees, and building insurance are all deductible.

5 Depreciation is computed as 10% of gross rental income.

6 Income tax rates for 2007 are as follows:

INCOME TAX 2007

PROPERTY VALUE, £ (€) RATE
Up to 2,150 (€ 1,588 ) 10%
2,150 - 33,300 (€ 24,598 ) 22% on band over (€ 1,588 )
Over 33,300 (€ 24,598 ) 40% on all income over (€ 24,598 )
Source: Global Property Guide



NON-RESIDENT COUPLE (FROM A NON EU/ COMMONWEALTH TERRITORY)
Non-resident couple΄s rental income1 €1,500 €6,000 €12,000
Annual Rental Income2 18,000 72,000 144,000
Less Personal Allowance3 (4,054) (16,270) (32,830)
Less Costs4 (1,800) (7,200) (14,400)
= Taxable Income 12,146 48,530 96,770
Income Tax 6
Up to GBP2,150 10% 636 636 636
GBP2,150 – GBP33,300 22% 1,272 9,278 19,890
Over GBP33,300 40% – – –
Annual Income Tax Due €1,908 €9,914 €20,526
Tax Due as % of Gross Income 10.60% 13.77% 14.25%
Source:
Global Property Guide research

Notes


1 The property is jointly owned by husband and wife, but then taxed separately (50% upon each partner). Exchange rate used: € 1 = GBP 0.675676.

2 Estimated costs. Actually incurred expenses such as letting fees, maintenance and repairs, lawyers’ fees, professional fees, and building insurance are all deductible.

3 Personal allowance for each taxpaper is GBP 5,035 (€ 3,719 ) for 2007.

4 Estimated costs. Actually incurred expenses such as letting fees, maintenance and repairs, lawyer΄s fees, professional fees, and building insurance are all deductible.

5Depreciation is computed as 10% of gross rental income.

6 Income tax rates for 2007 are as follows:

INCOME TAX 2007

PROPERTY VALUE, £ (€) RATE
Up to 2,150 (€ 1,588 ) 10%
2,150 - 33,300 (€ 24,598 ) 22% on band over (€ 1,588 )
Over 33,300 (€ 24,598 ) 40% on all income over (€ 24,598 )
Source: Global Property Guide





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