Income from land and property abroad

This section is accessed via the Data Input tab within the tax return to add details of income received from land and property abroad. Do not use this section to input details of Furnished Holiday Lets in the EEA; these should be entered in the Income from property section.

When entering income from overseas land and property you can choose to enter each property into a separate section, or you can place all properties from a single country into the same section. Taxfiler by IRIS will aggregate the results for the tax return form.

All amounts of foreign income received and foreign tax paid must be entered in sterling.

In most circumstances foreign income only needs be declared where the taxpayer is resident in the UK for all or part of the tax year. Do not enter foreign income if the taxpayer is non-resident as Taxfiler by IRIS will include all entered income on the return and computation.

How is relief given for residential finance costs?

From 2020/21 tax year relief for finance costs is no longer available as a deductible expense against rental income. Instead a tax reduction @ 20% is given to reduce the income tax liability.

The tax reduction is the lower of:

  • Property profit after deducting losses brought forward and...

  • Adjusted total income that exceeds the personal allowance – this is income after losses and reliefs BUT excluding savings and dividends income.

Any finance costs unrelieved in this way is carried forward to subsequent tax years.

Land and property abroad

  • Country – enter the name of the country where the property is located. If there are multiple properties in a country then you may choose to aggregate the details into a single section, or enter each property separately. If you have properties in more than one country then use a different section for each country.

  • Number of properties – enter the number of properties that you are including in this section, if you are aggregating property income for a country.

  • Address – select Change address to enter the address of the property. The address is not required for the tax return so is for memo purposes only.

Accounting method

  • How are income and expenses calculated? – select an option from the drop-down list either Accrual (traditional) basis or Cash basis.

Income

  • Total rents and other receipts – enter the sterling value of all rents and other income, excluding chargeable premiums.

  • Premiums paid for the grant of a lease – enter the sterling value of any chargeable premiums or other lump sum payments.

Property Income Allowance (up tp £1,000)

No allowance claimed against any other properties this year.

  • Claim relief against property income? – tick the box to claim property income allowance.

Expenses (excluding finance costs for residential properties)

Expenses will be ignored if Property Income Allowance is claimed. Expenses are added in a grid format.

  • Description of expense – enter a brief description of the expense.

  • Expense – enter the sterling value of the expense.

  • Private use – enter the sterling value of any private use portion of the expense.

To delete a line from the grid, select the ‘trash can’ icon at the end of the line.

Finance costs for residential properties

  • Interest and other finance costs

  • Allowable as an expense – (75% of costs in 2018. 50% of costs in 2019 and 25% of costs in 2020, 0% of costs in 2021)

  • Unused residential finance costs brought forward

Calculating taxable profit or loss

  • Total expenses including finance costs

  • Net profit or loss – this field will display the net profit or loss calculated from the income and expenses. A loss will be shown in brackets.

  • Private use – this field will display the total private use to be added back to the profit or loss figure.

  • Balancing charges – enter the value of any balancing charges arising as a result of the disposal of assets or a cessation of the rental business.

  • Capital allowances – enter the value of any capital allowances claimed.

  • Zero-emission car allowances

  • Zero-emission goods vehicle allowance

  • Structures and Buildings allowance

  • Electric charge point allowance

  • Cost of replacing domestic items in residential lettings

  • Adjusted profit or loss – this field will show the adjusted profit or loss. A loss is shown in brackets.

  • Foreign tax taken off or paid – enter any foreign tax that has been deducted or paid.

  • Claim Foreign Tax Credit Relief? – tick this box to claim foreign tax credit relief on any foreign tax suffered. If not ticked, any foreign tax will be deducted from the taxable profit.

  • UK tax taken off – enter any UK tax withheld.

  • Taxable profit – this field will show the total taxable profits, before losses brought forward.

Losses

  • Loss from excess C.A. – this field will show the amount of any current year loss that has arisen as a result of excess capital allowance expenditure. These losses may be used for sideways relief against other income for the year.

  • Excess C.A. offset against other income for year – enter the amount of loss from excess capital allowances that should be relieved against other income for the tax year. From 2014 there are limits on the amount of loss that can be utilised for sideways relief; see HMRC helpsheet 204 Limit on Income Tax Reliefs.

  • Losses brought forward from earlier years – enter any losses brought forward from earlier years.