Renting A House In The UK: The Tax Relief You Can Claim
Most foreigners moving to the UK are highly advised to rent a property for a period of time upon their arrival. In the event that the new lifestyle does not suit them, they will be spared from paying a huge amount of money on a property that they may have to leave behind.
Moreover, there is such a thing as a rent tax credit. That is, you can claim a tax rebate on the rent that you paid for apartments, flats or houses. Whether used as a sole or main residence, anyone paying for private rented accommodation and paying income tax can claim rent tax credit.
Your eligibility, however, depends on whether or not you meet several conditions.
Where You Already Renting Before Or On 7 December 2010?
If you are, then you can definitely claim this relief. Even if you enter a different rental agreement after the specified date, you would still continue to qualify for the tax relief. So, it doesn’t matter how many times you move in and out of different rental properties, you can still claim relief, as long as you meet the 7 December 2010 requirement.
Are You Renting Private Accommodation?
As already mentioned, if you are renting accommodation privately and are paying income tax at the same time, you can get a tax rebate on part of your rent. This is not the case if you pay your rent to a local authority or a state agency. The same thing is true if your lease agreement is for 50 years or more.
The amount of rebate that you receive is calculated at the standard rate of 20%, based on your personal circumstances and the tax allowance amount specified below.
For The Tax Year 2015
- Single and aged under 55 years – £428.84
- Single and aged over 55 years – £857.76
- Married/widowed/in a civil partnership/surviving civil partner and aged under 55 years – £857.76
- Married/widowed/in a civil partnership/surviving civil partner and aged over 55 years – £1,714.37
To calculate: the tax allowance amount for a single person under 55 is £428.84. Multiply this by 20% and the maximum amount received for the rent paid in 2015 will be £85.77.
To claim rent relief, you must first apply to your local tax office. Complete the Form Rent 1 and then send it to the tax office. If you live in Ireland, you can also use the PAYE Anytime service of the Revenue to claim relief.
Be aware though that the Revenue Commissioners might ask for the receipts for rent that you have paid. Regardless if you pay your rent to an agent or directly to your landlord, you must keep a copy of the receipts. Make sure that they indicate the landlord’s name, PPS number and address, amount of rent that you have paid, and the period of time covered by the receipt. Keep your receipts for at least 6 years.
If you were unaware of the rent tax credit, and have been renting a home in the UK for a long time, find out if it is not yet too late to file a claim. If the end of the tax year in question still falls within the 4-year period, you can still file for tax relief.
Know though that if your landlord lives abroad and you pay through an agent, tax treatment would be different. This is because it is the agent who must account for tax and not you. This means, no tax will be deducted from the rent.