Rental Income, Resident, R38, R40, Remittance basis

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Welcome to our Tax Glossary. Here you will find clear and comprehensible definitions of most of the tax terms you will face when dealing with UK income tax. This Glossary will help you understand the tax language, however it will not offer direct solutions to your tax issues. If you need further advice on any of those tax terms - just ask a tax adviser and get a free consultation right now!

Letter: R

R38: A Form of Authority - it is to be completed when a taxpayer is due a tax refund and the repayment should be issued to a third person.

R40: A form used for claiming a repayment of tax deducted from interest income. It gives details of total taxable income and tax deducted from it for a particular tax year.

Remittance Basis: Tax is usually payable by UK residents on worldwide income. This does not always apply to individuals classed as not domiciled here. In these cases, tax is only due on foreign income when it is actually brought into the UK. This is known as remitting it to the UK.

Rental Expenses: Rental expenses fall into two categories.

Revenue expenses: Ongoing expenses incurred in the rental of a property are deducted from the annual rental income to arrive at the profit. They may include letting agent's fees, house insurance etc.
Capital Expenses: These are expenses on the fabric of the property. For instance, an extension to a house, or new wiring etc. increasing the value of the property. Such expenses can only be claimed against any future capital gains tax.

Rental Income: Income from UK land and property which is taxable as investment income, except for Furnished Holiday Lettings which is treated as trading income.

Residence: In UK tax, your residence is where you are classed as living in any particular year. If this is the UK, it is likely that you will be taxed on all your worldwide income. A person is definitely classed as resident in the UK if more than 183 days were spent here in a particular year. For more information, please refer to our non-residence tax section.

Resident: For tax purposes, one is classed as resident in the UK if more than 183 days were spent in UK in a particular tax year. Most often the place of residence is where one spends the major part of a particular year.