From the British High Commission - new tax laws

[PhotoLady]

If you own a holiday home in Cyprus that you rent out, you should check that you are paying the correct UK tax on this property by 30 September otherwise you may face the tougher penalties that are coming into force. #offshoreassets

Check here for further guidance: https://www.gov.uk/guidance/requirement ... oreevasion

[darrow]

This presumably applies if you are a Tax Resident and living in the UK, if you are living in Cyprus, and you are renting a property out here then you should be declaring tax here. Paying tax in the UK on property as a Cypriot Tax resident would only apply to a UK property.

We pay tax here on our UK rental. I spoke to a tax technician in UK and was told that it was correct! So who knows for sure what is right?

[darrow]

That is correct, rental income from a UK property is payable in the UK, it does not matter where you are resident. Hopefully you are registered as a Non Resident Landlord, which means you submit a Self Assessment Tax Return and are not having tax paid by your rental agency at source.

Hudswell , We are in Cyprus and are registered as non resident landlords in UK. We were told that due to our UK allowances we would not have to pay tax on income rental so it is correct that we declare them in Cyprus! That was from an HMRC "technician", only a few weeks ago! We have been declaring our UK rental for several years in Cyprus!

[darrow]

As non resident Landlords you should be completing a UK Self Assessment Tax Return, and of course if your rent does not exceed your UK Tax Allowance then there is no tax to pay, but you should still be completing the return. And yes you should also declare your UK rental income on your Cypriot Tax return but because of the DT agreements in place you will obviously not pay tax on the income in Cyprus either.

we do fill in a UK self assessment. Our UK rental income is declared in both countries, but we pay tax on it in Cyprus. Correct according to the "technician"

[PhotoLady]

There are numerous parts to this new change in law which comes into being from 1st October this year:
A brief outline here below, but there are many parts which should be looked into if you don't want to be fined everything you have earned plus the tax you should have paid...

Part One: the legislation and its application
The purpose of the legislation
The purpose of the RTC legislation is to require those with undeclared offshore tax liabilities (relating to Income Tax, Capital Gains Tax or Inheritance Tax for the relevant periods) to disclose those to HMRC on or before 30 September 2018.
This will allow HMRC to take the appropriate action, for example, the collection of tax, interest and any penalties due under the appropriate legislation currently in force. This will ensure that those with offshore interests pay the correct amount of tax. Where taxpayers are unsure whether they have undeclared offshore tax they will need to review their affairs to check whether action is needed to comply with the RTC.
30 September 2018 was chosen as the final date for corrections as this is the date by which more than 100 countries will exchange data on financial accounts under the Common Reporting Standard (CRS).
CRS data will significantly enhance HMRC’s ability to detect offshore non-compliance and it is in taxpayers’ interests to correct any non-compliance before that data is received.
To ensure there is an incentive for taxpayers to correct any offshore tax non-compliance on or before 30 September 2018 there are increased penalties for any failures to correct by that date.

The Requirement to Correct (RTC) rule
This new legal requirement is included at Section 67 and Schedule 18 of the Finance (No. 2) Act 2017 and creates an obligation for anyone who has undeclared UK tax liabilities that involve offshore matters or transfers to disclose the relevant information about this non-compliance to HMRC by 30 September 2018.
Failure to disclose the relevant information to HMRC on or before 30 September 2018 will result in the person becoming liable to a new penalty as a result of their failure to correct (FTC). The new FTC penalty is likely to be much higher than the existing penalties, with a minimum penalty of 100% of the tax involved.
To avoid becoming liable to these new higher penalties, a person must correct the position by no later than 30 September 2018. If they do this, the tax and interest will be collected and the existing penalty rules will apply. We explain in more detail what must be done by 30 September 2018 below.
If taxpayers are unsure whether they have undeclared UK tax liabilities that involve offshore matters or transfers, they should check their affairs and if necessary put things right before they become liable to the new FTC penalties that will come into force on 1 October 2018.

[Mighty Sprite]

Hudsell,

Darrow can be correct. If you are tax resident in Cyprus but have rental income in the UK you have to declare it in both places but where you actually pay tax will depend on what allowances you qualify for.

There is the possibility that you do not pay any UK tax on UK rental income but you do pay Cyprus tax.

[Rita Sherry]

This is my situation. I have a private pension and a government employee pension (not full years service) but the combined total puts me over the Cyprus tax free threshold so I have always declared and paid tax here. When I first read the details of the new Double Taxation Agreement I thought I would be better off as my government pension would be taxable in the UK whilst my private pension would be taxable in Cyprus and as both pensions in their respective countries are just below the tax free limit I assumed there would be no tax to pay in either country. However, my Accountant (no names but she is probably the most highly regarded in Paphos having previously worked as an IR tax inspector) says differently. She agrees that as my UK government pension is below the UK limit I will not pay tax there, but she says that the government pension is also declarable in Cyprus and will add to my overall income here as it does now so my tax burden here will largely remain unchanged. She also says that if my government UK pension was higher and put me above the tax limit in the UK then whatever tax I had to pay there would be deducted from my Cyprus tax bill. I initially thought she was wrong but I can see the logic in this ……… but naturally I still hope she is wrong (but I doubt it!)

Austin7

She isn't - I think we share the same Accountant and received the same advice. I also raised the matter with an ex colleague of mine working in the Inland Revenue Overseas Section who confirmed what we have been informed. He did advise that the DTA had not yet been ratified (I think it might have been now) and was subject to amendment but added he did not think any amendment would significantly change the proposals re Government funded pensions as the change was to bring the agreement between Cyprus/UK into line with all the other countries which are subject to Double Taxation Agreements. HMRC follows us wheresoever we go even beyond the grave i.e. two certainties in life death and taxes but its a lovely day again

Rita

[WHL]

Best advise, I ever had was, get yourself a good accountant and stay with them.