Readers’ forum: Rental income

Rental income

We have a new client who is in the armed forces. He is being seconded for two years to Cyprus. My understanding is that so long as he continues to be paid by the army his employment income will be taxed as though he is UK resident.

However he also has rental income interest and dividends which should be taxed on the basis that he is not resident. The double tax agreement takes the dividends and interest outside the UK tax net but the rental income will remain taxable here.

I would normally expect the income to be covered by personal allowances for a non-resident. However his salary will use the allowances and basic rate band so that the rental income would attract higher rate tax if included in self assessment. Is this correct? If not what is...