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Mortgage, HMRC et al

Discussion in 'Teaching abroad' started by msp2, May 29, 2017.

  1. msp2

    msp2 New commenter

    My wife and I (and 2 children) are moving to the Middle East this summer to both take up jobs at an international school. We have a property in UK we will be renting out. We have a fixed rate mortgage until Mid 2018, but then will revert to SVR.

    Do we need to inform HMRC of our move abroad?
    Those who have had a similar situation, what have you done about your mortgage?
    Did you sort it before going abroad?
    What did you do about the mortgage when you returned to the UK?

    Sorry if this is a little vague: happy to try and clarify. Just concerned that if we do nothing then it will cause problems down the line...
     
  2. Jeversptj

    Jeversptj New commenter

    Are you renting your house out privately or through an agent? If with an agent, they will guide you with HMRC. I think part of the rent they collect from your tenants is redirected to HMRC.

    I rented mine out privately with all the rent going into my UK bank with which I pay the mortgage, and now that the tax year is up have contacted HMRC to pay what I owe for this last tax year. (My rental income took me over the personal allowance as I worked in a UK school from the previous April till I left to teach abroad on the summer.) I did contact them before I left and they were happy this way.

    I informed my mortgage company as you're supposed to ask for their permission. I seem to remember I also had to pay them £100.

    PM me if you want the name of the online rental thing - they were REALLY good. Even if you use a rental agency you still have to do a lot of the work yourself preparing paperwork, completing forms etc. Doing it yourself means you can 'interview' and choose your tenants yourself, and still get references as usual. They cover everything that rental agencies do. A friend acts on my behalf and I pay her on a needs-basis to organise any repairs or sort out any issues. Once you've paid to get it all going, you don't then have to pay a monthly percentage as you do with rental agencies. I'm sure there are good ones who do give peace of mind, but from personal experience I've only heard complaints.

    Btw, the biggest challenge was dealing with internet connection as I was leaving before the contract was up.

    On a different note, I was surprised how much it costs me not to have my house to live in when I go home to the UK for the holidays as I have to rent a place myself (that's big enough to hold my student sons as well.). It still makes financial sense to rent out, but thought you might appreciate the heads up, especially as you've 2 children to accommodate.

    I have no experience of changing a mortgage when out of the country but If I were you I'd have the conversation with them beforehand.
     
  3. 576

    576 Established commenter

    Do a search, this has been addressed so many time.
    Also seach for hmrc info - it's all online.
     
  4. ndugu

    ndugu New commenter

    I agree with the previous contributors regarding the HMRC and the mortgages.

    As I rented my house through an agency for two years up until last July, the Agency insisted I completed a non-domicile Landlord before I could receive any rent. I then had to complete a self assessment tax assessment.

    Regarding the mortgage, I also contacted the building society and they made a point of reminding me that I needed their permission but if they didn't give it too me I would be in breach of contract.

    I really struggled to get a mortgage in the lead up to the deal running out, as I was in Egypt it was only slightly easier in other countries. In the end I returned to the UK after 2 years and after 3 months was able to get a new mortgage as a UK resident. It was a big worry knowing that it was going to be hard to re-negotiate with the new conditions. Sorry to be so negative!
     
  5. the hippo

    the hippo Lead commenter Community helper

    As regular readers of the pachyderm's ramblings will know, I always advise people to seek out the advice of a good accountant if they are planning to teach overseas. This is particularly the case if you intend to let out your property in the UK while you are away in foreign parts. From a financial point of view, there are lots of advantages (and some disadvantages) to the expat life and a good accountant can steer you through this minefield.

    But whatever you do, do not rely upon the out-of-date and inaccurate advice of some old codger on one of those silly TES forums.
     
    estrella7, Interista and amysdad like this.
  6. amysdad

    amysdad Established commenter

    You usually have to inform your lender you are renting out, as they may require you to change to a buy-to-let mortgage. We did - in writing - and still have a copy to prove we have informed them as they did not respond. Ultimately any lender's action will depend on your history and how the mortgage has been - if there's been no problems paying in the past, and you continue to pay in the future, and if the loan to value is low (eg below 50%) then they are less likely to be concerned as if you're on a 95% LTV mortgage and have missed a couple of payments.

    If you go through a rental agency, then this will make things easier for you on a number of points. Firstly, they will give you the HMRC form to get your rent gross, otherwise they have to deduct tax and you then reclaim it. Remember in your first year abroad you will have to pay some tax as presumably you will work until the end of the summer term in the UK, so payment from April to July. Income is then judged as any rent over the interest payment, so you need to know what the total interest paid is (you can estimate on your tax return if you have a repayment mortgage.) It's unlikely though that in your second and subsequent years you will exceed the £10500 personal allowance though if the only thing you have is your own property.

    The agency will also be more able to deal with things which go wrong and make it much easier for you. In the last year, we've had to get a tree trimmed, a boiler replaced and chimneys swept which would have been a real hassle trying to do it from abroad. They take a cut of your rent, but ultimately do make it easier for you.
     
  7. Interista

    Interista New commenter

    This is the best advice, everyone has their own unique situation. I rent my house out and it barely covers the mortgage, when I contacted HMRC they said just to write them a letter outlining this and I wouldn't need to fill anything out. You really do need professional advice though.
     
  8. desertestrella7

    desertestrella7 New commenter

    I am rubbish with all this paperwork so it was a minefield for me when I first moved to the Middle East 7 years ago. I informed my bank and they switched me to a buy-to-let mortgage. I got an accountant who has been doing my annual tax return since I moved out here and he has charged a flat fee of £200 + £40 vat each year. He is a life saver and it is money well spent.
    I had to register as a 'landlord' with Glasgow City Council and it has to be renewed every 3 years, but the agency I use to let my flat out are excellent at keeping me informed of all that, as well as the council. Some people know their way around all these financial systems but I don't and I didn't want to be caught out just because I'd not asked the right question to the right person and ended up with a huge tax bill to pay!
     
  9. desertestrella7

    desertestrella7 New commenter

    I am rubbish with all this paperwork so it was a minefield for me when I first moved to the Middle East 7 years ago. I informed my bank and they switched me to a buy-to-let mortgage. I got an accountant who has been doing my annual tax return since I moved out here and he has charged a flat fee of £200 + £40 vat each year. He is a life saver and it is money well spent.
    I had to register as a 'landlord' with Glasgow City Council and it has to be renewed every 3 years, but the agency I use to let my flat out are excellent at keeping me informed of all that, as well as the council. Some people know their way around all these financial systems but I don't and I didn't want to be caught out just because I'd not asked the right question to the right person and ended up with a huge tax bill to pay!
     
  10. the hippo

    the hippo Lead commenter Community helper

    Yes, I would agree with you and agree with you again, estrella7. Using the services of a good accountant is usually a sensible idea, especially if you are letting out your property while you are away in foreign parts.
     
    estrella7 likes this.
  11. desertestrella7

    desertestrella7 New commenter

    Ha ha to the agreeing with me again, Hippo! The internet in Q8 still leaves a lot to be desired and I didn't think my post had posted.... I then tried to delete the second one but I can't work out this new TES site. But thank you for making me laugh at the end of an extremely full-on academic year...
     

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