Suppose you are a non-resident landlord owning a property in the UK. In that case, the rental income from your UK property will be taxable in the UK, subject to the availability of personal allowance for residents and citizens of certain countries.

As it can be difficult for HMRC to pursue overseas landlords for the tax due, UK tax law seeks to collect the tax on the rental income before it is paid under the Non-Resident Landlord Scheme (NRLS). Under this rule, the UK letting agent is required to deduct tax at the rate of 20% on the rental income before paying the non-resident landlords. So, for example, if the rent payable to the non-resident landlord is £1,000, the letting agent needs to deduct the tax at 20% of £200. The letting agent then pays £800 to the landlord and £200 to HMRC.

Who are Non-Resident Landlords?

As per HMRC, the non-resident landlords are persons: 

  • Who have UK rental income, and 
  • Whose "usual place of abode" is outside the UK.

HMRC normally regards an absence from the UK of six months or more as a person having the usual place of abode outside the UK. However, it is possible that a person may be a resident for normal tax purposes but considered a non-resident under the Non-Resident Landlord Scheme.

Can a Non-Resident Landlord receive rent with no tax deduction?

Yes, if an approval has been received from HMRC on this matter. A non-resident landlord can apply for the approval to receive his/her rental income gross on the basis that:

  • Their tax affairs are up to date, or 
  • Their never had any UK tax obligations, or
  • Their do not expect to be liable to UK tax for the tax year in which the application is made.

Once the approval is received for gross payment of rental income, a letter will be sent to both the non-resident landlord and the letting agent to pay rental income without deducting tax.

UK Property Accountants can make the application on behalf of non-resident landlords if they meet the eligibility criteria.

Do Non-Resident Landlords need to complete a tax return? 

Yes, any landlord who earns a rental income from UK properties must declare their income in the tax return. The return is prepared based on the tax year, which runs from 6 April to 5 April each year. The tax rates and further details on the income tax return can be found in our detailed guidance on Income Tax Return

How can UK Property Accountants help?

The team at UK Property Accountants has helped hundreds of non-resident landlords prepare and file their income tax returns. We understand the double taxation treaty, availability of personal allowance and other peculiar issues concerning non-resident landlords to provide you expert service. We also help you to register for the Non-Resident Landlord Scheme.

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