Paying UK mortgage lump sum from abroad.
Discussion
We've a mortgage with Halifax for our house in the UK - it is rented out and we have Non Resident Landlord status with HMRC. We're in Dubai.
The terms of the mortgage says we can pay a lump sum off per year (£25k) without incurring any type of redemption fees.
My question is, if we pay off the max of £25k, will we be liable for any tax on that as the money is coming in from outside the UK?
Asking first on here as I don't want to have to engage an accountant just for this question and not sure if Halifax would even be the right people to speak with.
Thanks in advance.
The terms of the mortgage says we can pay a lump sum off per year (£25k) without incurring any type of redemption fees.
My question is, if we pay off the max of £25k, will we be liable for any tax on that as the money is coming in from outside the UK?
Asking first on here as I don't want to have to engage an accountant just for this question and not sure if Halifax would even be the right people to speak with.
Thanks in advance.
You might want to think about NOT paying anything off your mortgage if you can keep the funds offshore from UK and thus earn interest without tax in either UK or Dubai. This way you continue to get a tax deduction from your rental income for interest paid on your mortgage AND earn gross interest on your surplus funds. This does of course depend on whether you can earn interest without it being liable to tax in Dubai and on whether the bankers' turn (difference between interest paid and interest received) is less than the UK tax you might save. However even if there is no gain you retain the cash on deposit available in case another need for cash arises.
Nollub said:
You might want to think about NOT paying anything off your mortgage if you can keep the funds offshore from UK and thus earn interest without tax in either UK or Dubai. This way you continue to get a tax deduction from your rental income for interest paid on your mortgage AND earn gross interest on your surplus funds. This does of course depend on whether you can earn interest without it being liable to tax in Dubai and on whether the bankers' turn (difference between interest paid and interest received) is less than the UK tax you might save. However even if there is no gain you retain the cash on deposit available in case another need for cash arises.
We currently don't pay any tax on the rental income as NRLs.Savings returns as the moment in Dubai are terrible - we have other investments but we have the cash so want to pay it off.
Being a non-resident landlord does not of itself mean you do not pay UK tax on UK rental income. The liability arises whether you are resident in UK or not and depends on whether your rental income less allowable deductions shows a profit and this together with any other UK based income exceeding your personal allowance.
What interest rate are you currently paying on your mortage?
I would have thought, that with rates as they currently, that you could find an investment pretty easily that would outstrip the interest you are payiong on your mortgae.
FWIW, my China fund is up 10% since I invested in March, compare this to the 2.5% on the mortgage and it's a bit of a no-brainer.
I would have thought, that with rates as they currently, that you could find an investment pretty easily that would outstrip the interest you are payiong on your mortgae.
FWIW, my China fund is up 10% since I invested in March, compare this to the 2.5% on the mortgage and it's a bit of a no-brainer.
Nollub said:
Being a non-resident landlord does not of itself mean you do not pay UK tax on UK rental income. The liability arises whether you are resident in UK or not and depends on whether your rental income less allowable deductions shows a profit and this together with any other UK based income exceeding your personal allowance.
That was my understanding - certainly the guys I worked with who had properties in the UK had to do self assessments for their UK income on rentals.Nollub said:
Being a non-resident landlord does not of itself mean you do not pay UK tax on UK rental income. The liability arises whether you are resident in UK or not and depends on whether your rental income less allowable deductions shows a profit and this together with any other UK based income exceeding your personal allowance.
Agree 100%. I had non resident status, still had to do a tax return and pay tax that was due.Just to clarify the above points for your. The NRL scheme just means you do not have any tax withheld on your rental income. As others have stated, you still need to complete a self assessment Tax Return and establish whether there is any taxable rental profit.
On your question regarding whether bringing that money into the UK gives rise to a UK tax charge - I assume you were resident/ordinarily resident prior to your departure from the UK and are UK domiciled. There is no UK income or capital gains tax charge on that money being remitted to the UK to pay the mortgage.
On your question regarding whether bringing that money into the UK gives rise to a UK tax charge - I assume you were resident/ordinarily resident prior to your departure from the UK and are UK domiciled. There is no UK income or capital gains tax charge on that money being remitted to the UK to pay the mortgage.
LC23 said:
Just to clarify the above points for your. The NRL scheme just means you do not have any tax withheld on your rental income. As others have stated, you still need to complete a self assessment Tax Return and establish whether there is any taxable rental profit.
On your question regarding whether bringing that money into the UK gives rise to a UK tax charge - I assume you were resident/ordinarily resident prior to your departure from the UK and are UK domiciled. There is no UK income or capital gains tax charge on that money being remitted to the UK to pay the mortgage.
Yes - the last comment was what I wanted clarification on - I also spoke with others and got the same reply.On your question regarding whether bringing that money into the UK gives rise to a UK tax charge - I assume you were resident/ordinarily resident prior to your departure from the UK and are UK domiciled. There is no UK income or capital gains tax charge on that money being remitted to the UK to pay the mortgage.
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