Tax Deducted at Source

Where an item of an individual's income has tax taken off by a third party leaving a net amount to be received it is called 'tax deducted at source'.

The main example of this concerns UK employment and pensions, however, can extend to other items of income, particularly non-UK residents who are letting out UK property.  The applicable current rule is that tax must be deducted from the gross rental income by the letting agent, or tenant, calculated on the basis of profit (income less expenses incurred, or paid, on behalf of the Landlord).  The filing of self-assessment tax returns bypasses this deduction of 'tax at source' and enables the Landlord to offset all allowable expenses (including finance costs) against the gross income.