If you own a rental property in the UK but your usual home is outside the UK, then you need to comply with the Non-Resident Landlords (NRL) scheme which sets rules around how you pay tax.
How you pay tax
The scheme requires UK letting agents to deduct basic rate tax from any rent they collect for non-resident landlords. You can set this tax off against your own tax bill at the end of the year.
You need to pay tax on your rental income if you rent out a property in the UK.
If you live abroad for 6 months or more per year, you’re classed as a ‘non-resident landlord’ by HM Revenue and Customs (HMRC) - even if you’re a UK resident for tax purposes.
You can get your rent either:
Get your rent in full
- in full and pay tax through Self Assessment - if HMRC allows you to do this
- with tax already deducted by your letting agent or tenant
If you want to pay tax on your rental income through Self Assessment, fill in form NRL1i and send it back to HMRC.
If your application is approved, HMRC will tell your letting agent or tenant not to deduct tax from your rent and you’ll need to declare your income in your Self Assessment tax return. Get your rent with tax deducted
Your letting agent or tenant will:
- deduct basic rate tax from your rent (after allowing for any expenses they’ve paid)
- give you a certificate at the end of the tax year saying how much tax they’ve deducted
If you don’t have a letting agent and your tenant pays you more than £100 a week in rent, they’ll deduct the tax from their rent payments to you.
Please visit the HMRC website for further information, the link can be found under our ‘Useful Links’ tab on our website.