Overseas Landlords And Income Tax

The Non-Resident Landlords (NRL) Scheme is a scheme for taxing the UK rental income of non-resident landlords.

The scheme requires UK letting agents to deduct basic rate tax from any rent they collect for non-resident landlords. If non-resident landlords don’t have UK letting agents acting for them, and the rent is more than £100 a week, their tenants must deduct the tax. When working out the amount to tax the letting agent/tenant can take off deductible expenses.

Letting agents and/or tenants don’t have to deduct tax if HM Revenue & Customs (HMRC) tells them not to. HMRC will tell an agent/tenant not to deduct tax if non-resident landlords have successfully applied for approval to receive rents with no tax deducted. However, even though the rent may be paid with no tax deducted it remains liable to UK tax, so non-resident landlords must include it in any tax return HMRC sends them.

Non-resident landlords who are eligible can apply at any time for approval to receive their UK rental income with no tax deducted. This includes applying before they have left the UK or before the letting has started.

Below is a brief summary of the service we can provide for non-resident landlords.

If You Are Preparing For Leaving The UK:

  • Deal with form NRL1 – Application for exemption from the non-resident landlord tax scheme.
  • Failure to obtain an exemption will result in tax deductions being made at source.
  • Apply for the Inspector’s agreement to your residence position, which will determine the extent of your UK tax exposure and review your circumstances to highlight areas where tax savings may be made.

When You Are Abroad:

  • Correspond with your letting agent to obtain details of rent received together with expenses paid.
  • Prepare the necessary sections of the UK self-assessment tax return form. In all cases this will include the land and property module. Where the property is owned jointly, a tax return will be needed for each owner.
  • Calculate your tax liability and agree this with the Inspector of Taxes.
  • We will notify you of payments on account required by the Inland Revenue and advise you if a reduction should be made.

If You Plan To Return To The UK We Shall:

  • Complete a full review of your tax position and advise you of any measures you need to take prior to your return to the UK to mitigate any potential tax liabilities.
  • Correspond with the Inspector to ensure that you are provided with your full entitlement of allowances on your return.