[Jo Jo]

I have a flat in the UK which is rented out, and I use an agent to manage this. I get charged a letting fee and a management fee for each tenant. The agent has been adding VAT to these fees - is that right?

I assumed that because I am in NZ I shouldn't have to pay VAT on this service as the service is being supplied to me in NZ. I've tried looking this up on the HMRC website, but can't make head or tail of it.

Many thanks in advance for any help.

[clairelouise]

This thread will be one I watch! We too are renting out our property (from next week actually - I am moving back in with my mum for a week :wah)
Our letting agent is charging us 5% plus vat of the rental income every month. TBH I didn't even think about the VAT, guess I am just a bit naive having not done this before. Will be interesting to see what a more knowledgeable person than me thinks about it!

Claire

[Paul]

Think the "place of supply" rules will mean that the UK property being rented will be the key here regardless of where you live. So I believe the agents are correct in charging VAT to non resident landlords I am afraid

Will check later when i have some time as VAT is never straight forward or logical !

[Tiggergirl]

Hi, when I looked on the HM Revenue & Customs website it was a bit long winded. I could only find something about tax on rental properties. If you are renting all or part of your property out then if your taxable profit from the property is added to your income & if it is above your tax allowance then you pay tax on it. But this is talking about if you are still paying tax in the UK via PAYE.

The way it's worded it is saying that if you are resident in the UK & you are letting properties here or overseas. Not if you are resident in NZ or overseas.

I would check with the Revenue people in NZ because that is where you are paying task. If you are resident abroad & you buy goods in the UK you can claim tax back off them.

We are always having problems working out whether you pay VAT on goods & services from overseas. From a business point of view if you are not VAT registered in the country you purchase the goods or services from then you have to make arrangements with the supplier for them not to charge you vat because you can't claim it back.

I hope I haven't confused you more :)

Tiggergirl

[Paul]

Hi, when I looked on the HM Revenue & Customs website it was a bit long winded. I could only find something about tax on rental properties. If you are renting all or part of your property out then if your taxable profit from the property is added to your income & if it is above your tax allowance then you pay tax on it. But this is talking about if you are still paying tax in the UK via PAYE.

The way it's worded it is saying that if you are resident in the UK & you are letting properties here or overseas. Not if you are resident in NZ or overseas.

I would check with the Revenue people in NZ because that is where you are paying task. If you are resident abroad & you buy goods in the UK you can claim tax back off them.

We are always having problems working out whether you pay VAT on goods & services from overseas. From a business point of view if you are not VAT registered in the country you purchase the goods or services from then you have to make arrangements with the supplier for them not to charge you vat because you can't claim it back.

I hope I haven't confused you more :)

Tiggergirl

There are two issues here, tax on profits on renting and VAT on services being provided

The OP's original query in relation to VAT, is as I thought above, and the lettings agent should add VAT to his services as the property is the key to VAT being charged in this circumstance

Paying tax on any profits made from renting your UK property is a whole other topic and plenty of info available through the search function on here as its been raised many times. Might be worth a new topic so it doesn't get lost within the original query

Paul

[mylesdw]

Your agent is supplying a service in the UK so you pay VAT there; nothing is being exported so he/she is right to charge it.

As far as income tax goes, you have accounts drawn up for the rental in the UK and pay any tax due there. You then include those accounts with your tax return here in NZ and they will adjust your tax here accordingly, including allowing for any tax you have already paid in the UK.

[lockstock]

Our letting agent is charging us 5% plus vat of the rental income every month. Claire


You're lucky - we're being charged 10% +VAT on ours!!

[James 1077]

Unfortunately the agent is correct - VAT must be added to his charge.

This is because of the VAT place of supply rules - in this case the service is being provided to you in the UK in relation to property that is also located in the UK. Even though you aren't in the UK the property is and therefore VAT must be added.

[Jo Jo]

Thanks for the info everyone.

[YouMeAndThree]

You're lucky - we're being charged 10% +VAT on ours!!

That's what I thought too, ONLY 5%+VAT :nice1. I thought I had a good deal at 8%+VAT for full management, all the other agents wanted 12-14.5%

Lx

[clairelouise]

That's what I thought too, ONLY 5%+VAT :nice1. I thought I had a good deal at 8%+VAT for full management, all the other agents wanted 12-14.5%

Lx

Ah I could lie and say I drive a hard bargain, but as I knew nothing, I guess I was just lucky!
The letting agents didn't have to find the first tennant for us though, as we told them we had found one, maybe that had something to do with it.
We're still not making any money out of the house though, just enough to cover the mortgage. With any luck the housing market will pick up and then we can sell and be done with it! (Lovely if it were that easy!:nice1)

Claire