Just doing this years return and not sure what to do about UK rental income which started in july.
We started renting out a small flat in july 2022 and after deductions to Dec 2022 have a small taxable surplus. I know i will have to do a uk tax return after 6th April and will be liable to pay somthing.
It has been suggested that it’s best to put on my Fench return the figures taken from the previous uk return.
Thus for the French one I’m doing now need not reference the period from July to Dec, but next year i will reference the income shown for the period July 2022 to April 2023. I understand that uk rental income is not taxed in France but by HMRC…but if it is shown in France how do i ensure I’m not taxed twice.
Advice from somene in a similar position earning uk income would be welcome.
I am not sure what you are saying here.
On your French return you declare income between 1st Jan ane 31st Dec of the year in question. So what you declare to the UK for the period April to April, will more often than not be significantly different from what you declare to France for the period Jan to Dec, unless it is a monthly amount that remains identical year after year.
On the French return each figure is processed according to what box it is in, because that box tells them what the source of the income was and it is the source of the income that dictates how it is treated. So the secret is to make absolutely sure that you have entered every figure in exactly the right box.
But as said you cannot do your French tax return yet because the forms have not been issued yet, and sometimes they sneakily change the boxes around.
I think it is the case that the Fisc recognise that the UK tax year and France are no aligned and you can use the figures from either arrangement but NOT mix them at will - ie if you start with one regime, you should continue it (or explain in the Messagerie if you have decided to align with the French regime Jan - Dec which is preferable of course) Since there should be no tax to pay, changing from the UK regime to France fiscal years will have no impact but may forestall the Fisc asking questions if the income declared suddenly drops because its an incomplete year.
The same will apply if you are using the pension figures from your P60 of course but it is, again, preferable to maintain some other record which records the receipts Jan - Dec in any given year. A spreadsheet is invaluable for that.
Fair enough I did not know that. In fact that was not the advice from my tax office, they were very clear that I was to use the Jan to Dec period for all income, but it is not surprising that all tax offices do not all say the same! That said it is many years since I asked the question so they may have become more tolerant.
I’ll be declaring rental income in France for the first time too. As Graham mentioned, there’s various ‘approaches’ and I’ve decided to use the figures from the UK 21-22 return calculation for France 2022. I haven’t asked the fisc about it, if I was I would say that was because I had a loss in UK 20-21 to carry forward and therefore easier to use the UK agreed figures.
I am also going to deduct the mortgage interest costs from the amount on the basis that they are deductable in France and weren’t deductable in UK (ok there was a tax credit in UK but that’s not the same). I read in a France manual to calculate the declarable amounts using France methods and allowances, I’ll be rechecking and bookmarking that source.
The only thing I didn’t get a reply to when I asked on the forum was which box to use on the main form. There are two boxes, I think one is for gross income which then gets a flat percentage deduction, the other is for actual income after allowable deductions, which would correspond to the UK tax calculation (?) with the exception of the finance costs.
One would certainly not want to have the UK deductions and then utilise the France flat rate deduction afterwards (I presume). (Hope that’s the appropriate smiley)
For all I know though maybe people happily do so. Maybe it’s OK.
Finally on the double tax front, the foreign taxable france exempt income is added to your france taxable income, the whole amount used to calculate the tax (expressed as a % of the total income) and then the foreign income part is deducted from the total. In effect, you pay the % only on your France taxable income. The effect is usually to push the France taxable income into higher taxable brackets - this is so one doesn’t benefit from two sets of tax free allowances - though it can be a bit painful at the 11 to 30% tax boundary! If you are already well into the 30% bracket (by at least your rental amount) then I don;t think it’ll make much difference.
I’ve got a spreadsheet for the calculation which I can post - was waiting for Graham to get his usual tax thread going first! Last year the simulator didn’t do foreign rent but the full simulator did do foreign salary so one could adjust the rent amount and enter as foreign salary to get an idea of the likely bill.
yes, if you want and think that’s sensible, no probs. I’m using mac so it’s whatever that’s called - but I presume they are all translatable. Let me know how to get it to you and I’ll prepare the template.
I really would recommend going and having a chat with your tax office before your first declaration. I have always found them very helpful and if you agree everything with them upfront you know you have done everything correctly and there be no queries or nasty surprises. They are nothing at all like HMRC.
I second that from experience. After OH died, I was left in a mess accountancy wise so went to the Impôts and had a meeting with one of their advisors who sorted out the TVA stuff, de-registered the business side with the fisc and got rid of some of the charges for me plus he then put our Impôts into my name only for which I have never paid anything as undr the threshold. It gets bad only if you ignore stuff in France and things move very quickly indeed.
I have just reread this thread and I am still concerned about all these decisions that are being made by individuals who seem to be new in France on what they will declare and when, what they will deduct and what they will not deduct etc, without consulting the tax office. That bit in particular makes t sounds as if it is up to you whether or not you give the tax office any choice in how you declare your income when I always thought it was the other way round. I do not think the tax office needs to ‘force’ any issues as such. The rules are there, you comply with them or you don’t, and if you don’t and you are controlled then it is your problem not theirs. The person behind the desk giving you advice is trying to help you to get it right and avoid any problems. There is a different person at the top of the building whose job it is to catch people who did not follow the rules, i.e. the French rules. Saying ah no I decided to follow the UK rules instead, might not go down too well.
So unless I had discussed this with a tax officer and had a record of the person’s name and the date of the discussion, I would not fill in a form that gives detailed instructions of what income to declare, and sign the form to confirm that I have complied, knowing that the information I have given is not what what was asked for.
I assure you I didn’t make it up that there is the ability to choose one fiscal regime regarding dates (Jan/Dec or April/April) over another - this was outlined in an article from Isabelle Want of Allianz Assurances (who provides tax advice) which I posted on SF some time ago but what was made clear is that you can’t just hop from one regime to another at will - once done, its fixed unless you make it clear that you are reverting to the French regime. That is in its own way is no different to what HMRC will agree to in regard to businesses. I recall my accountant changing the date arrangements on one occasion but there is no pecuniary advantage obtained in the long term since the next reporting round catches up (so perhaps less declared in year 1 but more in year 2 or vice versa).
I wholeheartedly agree with you in my despair that people think they can just decide for themselves what they can and choose not to disclose to the Fisc. There was was one correspondent on SF (account since cancelled) who absolutely insisted that the UK State pension was a Government pension and nothing would convince him otherwise. He even suggested that the Fisc he dealt with, when asked, had confirmed that to be so! I can only think in this case it was more a matter of what question he asked and the way he provided the information.
I also agree with maintaining detailed information about what was asked of whom, when and the detailed response.
The Fisc (as you say) are nothing like HMRC and if you can show your reasons for making a decision, it is extremely unlikely that - even if you are wrong - they will penalise you on that occasion but woe betide you if you repeat the error!
No I am sure you are not making anything up and clearly you know how it works. My concern is people who seem to be new in France doing their first declarations and who to my way of thinking maybe do not realize how important it in France to make sure your back is covered. With tax either you try to follow the rules to the letter or you have a very solid reason why you did things a bit differently and also you had prior agreement from your tax office. Of course the chances of being chosen for a spot check are probably one in several thousand, but then every person who is chosen also thought that. The fisc are very helpful when you ask them things but when they come down on you it is several tons of bricks, I would say worse than HMRC because the French rules are more cut and dried and there is not much wiggle room. Of course you can always ask Isabelle Want to represent you and she will win the case but it might be cheaper to pay the fine!
That is very debatable I think. It is possible to gain significant advantage according to how you split your income between tax years. Fifty fifty might keep you in the lower tax bracket both years. Seventy thirty might put you into the higher tax bracket for the first year and the lower tax bracket for the second year.
I made a genuine error when I first came to France about 16 years ago. I left off a fairly sizeable amount of bank interest (bank interest used to be a thing back then ) because it had already had tax deducted from it. The tax office wrote to me as they had gathered evidence from the UK of my bank accounts and I went there and explained my error and they were fine about it. It made no difference to my French tax position and, of course, I made sure to include it after that.
I think a number of people don’t fully realise that information exchanges routinely between the tax regimes (not suggesting you didn’t btw) and that by for example missing an account off the cerfa 3916 form they will somehow escape attention.
Electronic matching does this job for them and very efficiently…
Well my point is simply that a person if given free choice would obviously choose to do what is to their advantage. But people are not given free choice. In cases where you appear not to have followed the rules to the letter the tax office is entitled to ask for justification of why you did what you did and if it appears the only reason was to gain personal advantage to the disadvantage of the tax office, it wil not look good.
I hope you were able to reclaim the tax from the UK?
I found this on the Blevins Franks web site and it also rymes with a guy who for several years has done French Tax returns …and does mine for a modest sum.
Blevins Franks: ## How is income from UK property rental taxed in France?
If you are resident in France and rent out UK property, the income is directly taxed in the UK. You must include as part of your taxable income for the year in France and will receive a credit equal to French tax and social charges.
It seems that for the French return now due I don’t need to include anything on it for 2022 year as I have yet to do the first return to HMRC (this April) on which I will show a small net income and pay tax in the UK. Then for the French 2023 year return ie early 2024 I will include income and tax figures from the April 2023 HMRC submission.
The key is that such income is taxed in the Uk like for example local/central/NHS (but nor state) pensions.
Then continue with this each year.
Does this work with what other people do who have uk rental income?
So how are you interpreting this bit? Because it sounds as if you have decided not to include it as part of your taxable income for the year in France (the French tax year being the calendar year).
Personally if France asks me to declare worldwide income between 1 Jan and 31 Dec, and I had income between 1.7 and 1.12 but I decide not to declare it, I would want to be 100% sure that this will be acceptable.
What still concerns me is that you seem to be regarding the French tax return as a kind of petit plus, it is the UK tax return that is important so you do everything to suit HMRC and France will have to fit round that, which is probably how it seems to you. France might not see it quite like that. If in December 2023 the fisc asks you why failed to declare all your 2022 income, and you say I was going to declare it next year honest I was guv, they might or might not believe you. That is why really do think it would be a good idea to have a word with them first.