Under the UK’s Non Resident Landlord (NRL) scheme a landlord with a usual place of abode outside the UK has tax on their UK rentals collected by the UK letting agent or tenant.
Landlords can though apply to HM Revenue & Customs to receive rental income from the UK property without tax being deducted.
Individuals who own a property in the UK and who spend a period of at least 6 months living and working in another country are therefore required to enrol in the NRL scheme if they want to avoid having tax deducted from rental income received from the UK property.
Note: The definition of “usual place of abode” is not the same as for non residence. Individuals have a usual place of abode outside the UK if they are outside from the UK for six months or more.
The NRL scheme requirements are as follows:
- Tenants must deduct tax from the landlord’s rental income if they pay rent of more than £100 per week directly to the landlord.
- Letting agents must deduct tax from the landlord’s rental income regardless of the amount of rent paid.
- The tax deducted is to be paid to HMRC within 30 days of each quarter ended 30 June, 30 September, 31 December and 31 March.
- As noted above, landlords can apply to HMRC to receive rental income without a tax deduction if:
- their UK tax affairs are up to date, or
- they have never had any UK tax obligations, or
- they do not expect to be liable to UK tax for the year in which the application is made.
- HMRC will instruct letting agents and landlords not to deduct tax if the application is successful.
- When a property is jointly owned the share of each joint owner is considered separately. In other words a separate application under the NRL scheme is required by each person who owns a residential property in the UK and who does not have a usual place of abode.
As a result of obtaining a clearance under the NRL for rental income to be received on a gross basis the landlord can expect to be required to submit an annual tax return to HMRC under the self assessment regime.
The due date for submitting a UK tax return under self assessment is usually 31 January following the end of the tax year.
Thus the 2020 UK tax return for a non resident landlord will usually be required to be submitted to HMRC by 31 Jan 2021.
bdh Tax is experienced in the preparation of UK tax returns for those who are living and working outside the UK.
If you have a rental property in the UK and are living in another country please complete the enquiry form on this web page if you would like a free initial chat about your situation and how we might help with your UK tax returns.
Once we have had an initial conversation we can send details of our fixed fees to you on a no obligation basis.