expat network

Are You A UK Non-Resident Landlord? There’s Tax To Pay

non-resident landlord scheme

 

Expats who rent out their UK property must register with the taxman’s non-resident landlord scheme.  If you have rental property in the UK but your usual home is outside the UK, your tenants or the letting agents you use will need to operate the non-resident landlord (NRL) scheme.

 

 

 

They need to deduct basic rate tax from rental income before they pass it on to you. You can set this tax off against your own tax bill, if you have one, at the end of the year.

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.

Letting agents and/or tenants don’t have to deduct tax if the taxman tells them not to and if non-resident landlords have successfully applied for approval to receive rents with no tax deducted.

But 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 the taxman 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.

The taxman may refuse approval if it is not satisfied that:

· The information in the application is correct.
· The non-resident landlord will comply with their UK tax obligations.

The taxman may withdraw approval if:

· It is no longer satisfied that the information in the application is correct.
· It is no longer satisfied that the non-resident landlord will comply with their UK tax obligations.
· The non-resident landlord fails to supply information requested by the taxman.

Some people who are not resident in the UK are not sent an annual tax return automatically, even though they have UK rental income. This is because many non-residents will have sufficient UK personal allowances to cover any liability.

The taxman has produced a booklet called Non-Resident Landlords – guidance notes for letting agents and tenants, that tells people what their responsibilities are under the scheme.

There is also a brief Letting agent’s guide to the NRL Scheme which outlines the main features of the scheme.

More detail on the scheme and guidance notes can be found by going to the tax website, www.hmrc.gov.uk, and searching for Non-Resident Landlord Scheme.