UK Income

[deezy]

I have a question about income generated in the UK. If this has been asked before can someone point me to the relevant post.

I have a flat in the UK that I rent out and usually I remit the money to Japan and declare it on my tax return. This year, I'm planning on leave the money in my UK bank to use when I go back in Spring.
My question is: what do I do about my Japanese tax return? Do I have to declare it even though it hasn't been remitted to Japan? If I do have to declare it, then how to work out the yen value of the rent?
Thanks for any help you can give on this.

[RetireJapan]

It depends on how long you have been in Japan. Under 5 years you are 'non-permanently tax resident' (nothing to do with the visa/status of residence) and might not need to declare foreign income if not remitted to Japan.

Over 5 years and you are now 'permanently tax resident' and should declare all foreign income on your Japanese tax return.

[Wales4rugbyWC23]

Wherever it is remitted or not to Japan, you still have to declare it on the Japanese rax return.

[deezy]

Thanks for the fast response!
Would I have to convert the amount to yen for the Japanese tax return? If so, which date would I use for the exchange rate?

[captainspoke]

You'd convert each payment (amount) on the date it was made. Set up a simple spreadsheet to list the payments and to total them up for inclusion on your tax filing. Use the TTM rates from here.

[northSaver]

Changing the subject slightly, I know someone who's not been paying Japanese tax on UK interest and dividends (not great amounts apparently), and would like to start doing it from this year. But he's concerned they'll run an audit on him and/or ask for previous years too, with fines for late payment. Has anyone been in this situation? And would you recommend he declares just this year's income, or all the previous ones too for which he was tax-resident in Japan? It's hard to know how the tax office will treat it if you've never been in that situation. Hopefully someone here has? Thanks.

[sutebayashi]

I have been filing tax returns for I suppose more than a decade now including stuff like foreign interest (small amounts I would say) but have never been audited yet.

My guess is the tax agency won’t come after your acquaintance for other years unless it is such amounts that would make it worth their while to do so.

I’m facing a similar situation this year with pesky ADR rights payments which haven’t had tax withheld at the source despite being in a tokutei koza and wondering whether it’s worth my time figuring out how to report the amounts versus a penalty should I under report.

I have no idea if I have reported my return correctly all these years, but I do know that I have never been audited. (Just lucky?)

[northSaver]

Thanks sutebayashi. Surprisingly we've not been audited either in more than 20 years, despite having complicated income sources and foreign assets. I think if you're honest and do your best then they appreciate it even if you make mistakes. One time we included land as well as the building in the depreciation calculation and underpaid tax for a few years because of this. But we told them the mistake and they only asked for the extra tax for the current year, not the previous ones.

I know ignorance isn't a good reason, but possibly more favourable than "avoiding hassle" in their eyes? I wonder how often they throw the book at you in cases like this, and how consistent they are? I've got a feeling it depends on the amounts involved, and possibly who's in charge at the time.

[Beaglehound]

Changing the subject slightly, I know someone who's not been paying Japanese tax on UK interest and dividends (not great amounts apparently), and would like to start doing it from this year. But he's concerned they'll run an audit on him and/or ask for previous years too, with fines for late payment. Has anyone been in this situation? And would you recommend he declares just this year's income, or all the previous ones too for which he was tax-resident in Japan? It's hard to know how the tax office will treat it if you've never been in that situation. Hopefully someone here has? Thanks.

I would likely just report this year and deal with back years if or when they ask. I imagine they will be more interested in future compliance rather than chasing small possible amounts of back tax. Maybe a different story if they rumbled your friend for not paying, but probably not if said friend is declaring this year voluntarily.

[northSaver]

Thanks Beaglehound. Yes, I think that might be the best policy. If they ask for previous years' and charge late-payment penalties then so be it. He was in the wrong after all. I'll try to follow up with him next year and post back with how it went. There may be others on here who are reluctant to pay tax on foreign income due to fearing the consequences of several years of non-payment.