Text size:

  • Small
  • Normal
  • Large
The HMRC (Her Majesty's Revenue & Customs) Non Resident Landlord Scheme taxes the UK rental income of non-resident landlords. Toby Melville / Reuters
The HMRC (Her Majesty's Revenue & Customs) Non Resident Landlord Scheme taxes the UK rental income of non-resident landlords. Toby Melville / Reuters

Taxes and liabilities when the family home is rented out

On your side: The National's resident consumer advocate answers questons on taxes and liabilities when the family home is rented out.

If you decide to let a property while out of the UK, you should start by registering with the HMRC (Her Majesty's Revenue & Customs) Non Resident Landlord Scheme. This is a scheme for taxing the UK rental income of non-resident landlords and requires UK letting agents to deduct basic rate tax from any rent they collect for non-resident landlords unless the agent has authority to pay the particular landlord his rental income gross, that is without deduction, which will be the case for you. To work out your taxable rental profit, subtract allowable expenses that you incur then deduct any allowances you are entitled to. Allowable expenses can include: water rates, council tax, gas and electricity; maintenance and repairs to the property (but not improvements) and contents insurance; interest on a mortgage to buy the property; costs of services, including the wages of gardeners and cleaners; letting agents' fees; legal fees for lets of a year or less, or for renewing a lease of less than 50 years; accountant's fees; rents and service charges; other direct costs such as phone calls, stationery and advertising for new tenants.Retain all paperwork relating to costs as you may be asked to produce evidence of expenditure. The net income is subject to tax if this is above the annual personal allowance, which stands at 8,105 (Dh44,373) in the current tax year.

I changed jobs at the start of this year, but my previous employer has told me that they will be making a case against me in the Dubai court saying I have joined their competitor company unless I pay them Dh30,000. There was a non-competition clause in my last contract, but I am not in the same line of work. I previously worked for a property agent, but no longer have anything to do with property. I don't see that I am working for a competitor, although my old boss is trying to say that I am still selling.I don't have the money to hire a lawyer, so what can I do? I am very worried that I could end up having to pay lots of money that I don't have when I have not done anything wrong. CC, Dubai

In this situation there is no need for you to have your own lawyer and you are able to defend yourself in court. You will have to deny the charge even though the burden of proof is with your previous employer. As the employer is claiming that you have joined a competitor, he will have to prove this. I suggest that you ask your current employer for a copy of their licence and a formal letter confirming the nature of their business. Note also that you must appear in court as if you do not deny the charges, the court can make a judgement based solely on what your previous employer claims. Should you win the case, you will not have to pay anything and all legal and court charges will be borne by your previous employer.

I run a family business and we have employed a waiter for many years. His salary has always been quite low as he received tips from customers and a bonus when the restaurant has done well. We are now planning to promote him to a role as a manager with a much higher salary. I understand that if he leaves, his end of service gratuity will be based in his new salary, even if he has been paid that for just a few months. I'd like to know if we can pay him his gratuity that has built up to date and start a new period of employment when he starts the new role. ML, Dubai

This would be in breach of UAE Labour Law and the full period of service must be used as the basis for calculating the end of service gratuity, using the final salary figure. Even if he has a new contract, his period of service must date from when he was first employed.

Several years ago, when I was living in the United States, I invested a few thousand dollars in a small company, although one that had proper shares and was listed. I have now heard that the company has gone bankrupt. What happens to the stock I bought, or to the bonds the company also issued? CH, Al Ain

According to the US Securities and Exchange Commission, a company that files for Chapter 11 bankruptcy can still trade securities until a resolution is reached, although bondholders will stop receiving interest and principal payments, and stockholders will stop receiving dividends. If a reorganisation agreement is reached, bondholders may receive stock in exchange for bonds, new bonds, or even a combination of the two. Stockholders may be asked to exchange old shares for new reissued shares, although they won't necessarily equal the value of the old shares.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. Contact her at keren@holbornassets.com

Back to the top

More articles


Editor's Picks

 Marina Square apartments Reem Island: Q1 2% rise. Studio - Dh65-68,000. 1BR - Dh75-95,000. 2BR - Dh110-145,000. 3BR - Dh170-190,000. Q1 2013-Q1 2014 no change. Sammy Dallal / The National

In pictures: Where Abu Dhabi rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Abu Dhabi have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 A Brabus Mercedes 6x6 Sports Utility Vehicle is readied for display during Auto China 2014 in Beijing, on April 20. Adrian Bradshaw / EPA

In pictures: Auto China 2014 exhibition

Leading automakers have gathered in Beijing for the kickoff of China’s biggest car show, but lacklustre growth and environmental restrictions in the world’s largest car market have thrown uncertainty into the mix. More than 1,100 vehicles are being showcased.

 The New York Stock Exchange. Rising interest rates will shift momentum away from bonds and back towards risk assets such as stocks. Richard Drew / AP Photo

Plan ahead for rising interest rates

It is now over five years since the majory central banks slashed interest rates to record low but that is all about to change. So, how will rising interest rates affect you?

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National