UK buy to let mortgages

[goodandbadjapan]

I'm not 100% sure on this but I think you can deduct all the costs involved so will only be taxed on rent after deducting necessary expenses. Also, you would have a personal allowance threshold in the UK and so unless you were getting more than about 11,000 pounds (I think), you won''t be taxed there. So, yes you will be taxed here but will only be taxed here and so it's not really any different to if you had the BTL while living in the UK. The rent wouldn't be tax-free there so not likely to be hugely different.

[Wales4rugbyWC23]

I'm not 100% sure on this but I think you can deduct all the costs involved so will only be taxed on rent after deducting necessary expenses. Also, you would have a personal allowance threshold in the UK and so unless you were getting more than about 11,000 pounds (I think), you won''t be taxed there. So, yes you will be taxed here but will only be taxed here and so it's not really any different to if you had the BTL while living in the UK. The rent wouldn't be tax-free there so not likely to be hugely different.

If you have BTL in the UK you need to do a UK tax return whatever your status is in Japan. Most letting agents will either deduct income tax at source or you have to fill in a form from HMRC which allows you to receive rent gross. As you said you do have the 11,000 pound tax allowance in addition you have the mortgage interest which is tax deductible, but has been greatly curtailed over the last few years.

[KyushuWoozy]

Just thinking out loud (haven't really thought this through) ...

Couldn't you open a Ltd company for your BTL? There are lots of BTL landlords who do this anyway for various reasons (not least that you can claim mortgage interest payments as an expense). If you didn't draw any salary or dividends from the company there presumably wouldn't be any income to tax.

[Wales4rugbyWC23]

Just thinking out loud (haven't really thought this through) ...

Couldn't you open a Ltd company for your BTL? There are lots of BTL landlords who do this anyway for various reasons (not least that you can claim mortgage interest payments as an expense). If you didn't draw any salary or dividends from the company there presumably wouldn't be any income to tax.

I have been in Japan for 20 years and I still haven't incorporated my school. If you want to reduce your UK income tax bill and have a few properties you could use your spouse's tax allowance. I think all you need for that is for your spouse to have a National insurance number. I think setting up a UK Ltd company from Japan could be quite complicated without the help of some expensive international accountants.

[x386dab]

Yeah, I get that tax in the UK should be minimal or zero unless you've got a property empire with rental income that exceeds the personal tax allowance. There's also a 20% tax credit although I'm not entirely how it works.

It's more the JP side. I haven't found anything that suggests you can offset mortgage interest payments against tax or anything like that which puts a considerable crimp on the yield. You used to be able to do this in the UK but the gov pulled up the drawbridge.

Incorporation is an option but requires serious research and planning. My hunch is it’s more for land barons with multiple properties who are leveraging up i.e. basically running an actual business. I also wonder if it complicates things if you ever move back to the UK and want to buy to a property to live in.

Thanks for your replies. Much appreciated!

[concerned]

Also for your info in case you pay tax in Japan on your foreign BTL income they also then request you pay in advance 2/3 of the previous years tax for the following year....

[Wales4rugbyWC23]

[quote=x386dab post_id=8344 time=1597405818 user_id=2151]
Yeah, I get that tax in the UK should be minimal or zero unless you've got a property empire with rental income that exceeds the personal tax allowance. There's also a 20% tax credit although I'm not entirely how it works.

The 20% tax credit works this way, if you have mortgage interest of 10,000 pounds a year, you can deduct 2000 pounds as a business expense. It used to be 100% which really was a perk.

[KyushuWoozy]

I think setting up a UK Ltd company from Japan could be quite complicated without the help of some expensive international accountants.

I looked into it previously and believe you can do it yourself online in less than an hour and for really trivial cost. I may be missing something but don't think so. Being a non-resident director isn't a problem.

Here's the link:

https://www.gov.uk/limited-company-form ... ur-company

[Wales4rugbyWC23]

I think setting up a UK Ltd company from Japan could be quite complicated without the help of some expensive international accountants.

I looked into it previously and believe you can do it yourself online in less than an hour and for really trivial cost. I may be missing something but don't think so. Being a non-resident director isn't a problem.

Here's the link:

https://www.gov.uk/limited-company-form ... ur-company

It does seem easy, my accountant in Japan told me that is cost 250,000 yen to incorporate here. 12 pounds to incorporate does seem very cheap.

[x386dab]

A snip at 12 quid. That's the Anglo-Saxon model of capitalism for you. However, while the process may be easy, working out if you will benefit from incorporating in the long term is not