Who potentially qualifies for UK income tax relief?

There are currently thousands of potential PROPERTY investors located out of the UK that are completely unaware that they may qualify for income tax relief on property income if they were to buy in the UK and have no other UK derived income. Below we discuss who may be entitled to claim UK personal income relief (in the form of personal allowances) for non-resident individuals, based on HMRC guidelines that can be found here click link > UK HMRC site Personal income tax ZERO rate currently sits at £12,570

Who Can Claim Personal Income Relief in the UK?

Many individuals may be unaware that, under certain double taxation agreements, non-resident individuals can claim UK personal income relief through personal allowances. This tax relief means you can earn a set amount of income in the UK without paying tax on it. The HMRC guidelines detail several categories of people who may be eligible.

Eligibility Overview

According to HMRC’s Residence, Domicile and Remittance Basis Manual, non-resident individuals who meet one of the following conditions may claim UK personal allowances :

Nationals of Specific Countries: Individuals who are citizens of Israel or Jamaica can claim personal allowances.
EEA Nationals: Nationals from any of the following European Economic Area (EEA) countries are eligible:
Austria
Belgium
Bulgaria
Croatia
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Iceland
Irish Republic
Italy
Latvia
Liechtenstein
Lithuania
Luxembourg
Malta
Netherlands
Norway
Poland
Portugal (including Madeira & the Azores)
Romania
Slovakia
Slovenia
Spain
Sweden
United Kingdom

This means that even if you are not a UK resident but hold citizenship from any of these countries, you could be entitled to the relief.

Nationals and Residents of Certain Other Countries: Individuals who are both nationals and residents of countries such as:
Argentina
Australia
Azerbaijan
Bangladesh
Belarus
Bolivia
Bosnia and Herzegovina
Botswana
Canada
Côte d’Ivoire (Ivory Coast)
Egypt
Gambia
India
Indonesia
Japan
Jordan
Kazakhstan
Korea
Lesotho
Malaysia
Montenegro
Morocco
New Zealand
Nigeria
Oman
Pakistan
Papua New Guinea
Philippines
Serbia
South Africa
Sri Lanka
Sudan
Switzerland
Taiwan
Tajikistan
Thailand
Trinidad and Tobago
Tunisia
Turkey
Turkmenistan
Uganda
Ukraine
Uzbekistan
Venezuela
Vietnam
Federal Republic of Yugoslavia
Zimbabwe

may also claim the personal allowance.

Residents of Specific Countries: Furthermore, individuals who are residents of: Austria, Barbados, Belgium, Fiji, France, Germany, Greece, Ireland, Kenya, Luxembourg, Mauritius, Myanmar (Burma), Namibia, Netherlands, Portugal, Swaziland, Sweden, Switzerland, and Zambia are eligible to claim the allowance.

Special Conditions and Exceptions

There are some important caveats to be aware of:

Income Composition Restrictions: If you are a resident of Kenya, Mauritius, or Zambia, or if you are a resident (but not a citizen) of certain European countries (such as Austria, Belgium, France, Germany, Luxembourg, Netherlands, Portugal, Sweden, or Switzerland), you cannot claim the personal allowance if your UK income is derived solely from dividends, interest, and royalties—or any combination of these sources.
Country-Specific Modifications:
France: From 6 April 2010, both residents and nationals of France are entitled to the personal allowance, regardless of the type of income they earn.
Germany: Since 6 April 2011, residents of Germany can only claim the allowance if they are also EEA nationals.
Netherlands: Similarly, from 6 April 2011, Dutch residents are granted personal allowances irrespective of the composition of their UK income.

Understanding whether you qualify for UK personal income relief can significantly impact your tax situation and therefor your annual tax returns on property returns. Our advice is always consult your financial advisor or use a tax practitioner that is UK based and has a deep knowledge of UK tax law.