An employed person has to relocate for work. He moves into a rented property at the new location and pays monthly rent for it. He lets out his previous (mortgaged) home and receives rental income from it. Can he offset any rent paid at the new location against the rental income from previous location? I know that temp workers can claim rental expense against tax but only where their own property is un-let and empty. Is it the same rule for a relocating worker?
Would it make a difference if he was letting a "buy-to-let" (I am checking whether this was the case).
After one year, he buys a property in the new location and sells the one in the old location (that he had let out) so no more rental income. He moves out of his rented property and into his newly mortgaged one. Any tax implications here?
There is no linking of the two properties for tax purposes. For the one year he has rental income that must be declared (which puts the tax payer on self assessment but I don't see that as a bad thing).
Because the main residence was only let for a short time (less than two years) there will be no capital gains implications on the sale of the main residence that was let out. (There are other rules besides time but just that one's enough to alleviate any CGT implication).
Do you have a link to further information about that temp workers claiming rental expenses? There are all sort of rules around that area including rules related to pay level and special rules for self employed and directors but I'm not familiar with any rules specific to a temporary worker who is not self employed being able to claim anything that an employee is not so would be interested for further details on that.
On the embedded question letting out a buy to let is always a business and would have tax implication even for a short period of let.
This whole area's a minefield of complimentary and sometimes on the face of it conflicting tax regulation.
Just to confirm, this is just a temporary worker (so short term payroll empoyee on fixed term employment). Not someone who is self employed or a contractor with their own limited company?
Also, how long are they temporary for as you state "after a year" which doesn't sound very temporary to me.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Firstly, I have a couple of guys on these umbrella schemes and, I'm afraid to say that I rely on the "Expenses Policies" from these companies, under the assumption that they are strictly monitored by HMRC and I am aware of some special dispensation thingy. I attach some here now, you might see fit to delete if not relevant. I'm still digesting your answer to my question and will get back shortly regarding that. Thank you.
The client has definitely permanently relocated and is not a temp (though I have asked him if he was initially temp). He is definitely employed and not in any way self-employed.
Shaun, thank you for bringing to my attention that this is more complex than I thought and requires much more investigation. I'm checking out some links as follows. They might help anyone else looking at a similar situation.
