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I have a property in Scotland where I will earn under £10k on when I rent it out (currently I live in it)

If I live in the UK at the time, and make say £40k I will earn a total of £50k with the property and will be required to pay tax on that £10k. (minus other expenses and allowances etc.)

If, however, I live and work abroad, my UK income will be below the personal allowance so would I not have to pay tax on the rent from the property?

From here it seems I will be eligible to a personal allowance: https://www.gov.uk/income-tax-rates

Looking here, I see a mention of a £1k property allowance but nothing about my personal allowance, but from what I can tell I should still get a personal allowance on property income: https://www.gov.uk/renting-out-a-property/paying-tax

So basically, my question is, will I save money on tax if I rent out a property and do not live in the UK?

EDIT: I will likely be moving to somewhere in the EU, but this isn't certain yet and could be anywhere. This question is more about just understanding and planning for the future rather than a concrete plan.

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  • You will have to pay income tax in the country you are living in.
    – Naktibalda
    Dec 28 '21 at 10:03
  • @Naktibalda not on the income from the rental property though, right?
    – KNejad
    Dec 28 '21 at 10:04
  • As a tax resident of another country you have to declare all your income and pay tax accordingly. You won't have to pay any income tax to UK though. I think that it would be better to tag a country you are going to move to.
    – Naktibalda
    Dec 28 '21 at 10:11
  • @Naktibalda it's more of a hypothetical at the moment. I could move to any country (likely in the EU) so I can't really say at the moment. I thought this would just be a UK matter and that the country I move to wouldn't care about the UK property or income.
    – KNejad
    Dec 28 '21 at 10:34
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    @KNejad - several countries in the EU require you to pay up to 1% of some valuation of your property per year (possibly minus any UK property/council tax if you pay that) under certain circumstances, for instance if you also own a house there. So not tax on rental income, but tax nevertheless.
    – nsandersen
    Dec 28 '21 at 14:08
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Some countries have a double tax agreement with the UK - an example is France (even post Brexit).

In France, you must declare all your world wide income (and the same will apply in many other countries too) but in view of the double taxation agreement, you will not pay French tax on the rental income from your property in Scotland. It will be declared in a discrete component of the tax form and will only be subject to UK fiscal arrangements.

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  • Thanks! So from what you say it seems that if I moved to France I would actually pay less tax since I would pay property income tax to UK and employment income to France (if my job was in France) meaning both would end up being on a lower tax bracket.
    – KNejad
    Dec 28 '21 at 10:50
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    Much would depend on your circumstances and earnings level of course but as an example, since some of our pension income is UK Govt Service pension which can only be taxed under the DTT, and those earnings in the UK are below the individual free tax allowance, we pay no tax in the UK whilst living in France and are only taxed on the UK State pension income which is also on the threshold of zero tax in France - so we benefit very well from this quirk.
    – 24601
    Dec 28 '21 at 19:01
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    Remember also that in France, you are taxed as a "foyer" so that if you are two people in a marriage or PACs arrangement, you get the free tax allowance for 2 people (2 parts) (even if the second person is not working) and then ½ parts for each child and an extra part for a third child. You need to consider the new arrangements post Brexit as a Third Country National (TCN) and how that might impact a decision to move to France and seek work.
    – 24601
    Dec 28 '21 at 19:01

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