The Non-Resident Landlords Scheme is a withholding tax system that requires letting agents and, in some cases, tenants to deduct basic rate income tax from rent paid to overseas landlords and pay it directly to HMRC. If you manage properties for overseas landlords or pay rent to a landlord who lives outside the UK, you need to understand your obligations.
Book a free call. We handle UK tax compliance for non-resident landlords and advise letting agents on their obligations.
Who is a non-resident landlord?
A non-resident landlord is a person whose usual place of abode is outside the UK and who receives UK rental income. UK residence for NRLS purposes is not the same as UK tax residency. A person can be UK tax resident but still be a non-resident landlord for NRLS purposes if they spend most of their time abroad.
Letting agent obligations
If you are a letting agent managing a property on behalf of a non-resident landlord, you have four main obligations. Register with HMRC within 30 days of the date you first become obliged to operate the scheme using form NRL4. Calculate the basic rate tax (20%) due on the quarterly rental income after deducting allowable expenses and pay it to HMRC’s Accounts Office Shipley within 30 days of the end of each quarter. Quarters run to 30 June, 30 September, 31 December and 31 March. Submit a quarterly return (form NRLQ) within 30 days of the quarter end and an annual return (form NRLY) to HMRC by 5 July each year. Provide the landlord with a certificate showing the tax deducted by 5 July.
Tenant obligations
Where there is no letting agent and the tenant pays rent of more than £100 per week directly to a non-resident landlord, the same obligations fall to the tenant. The tenant must register, deduct tax quarterly, pay it to HMRC and submit the same returns and certificates as a letting agent. This catches a significant number of tenants who may not realise they have a legal obligation.
Self Assessment, rental income reporting and NRLS compliance. Fixed fee, no surprises.
Receiving rent gross
A non-resident landlord can apply to receive rental income without tax being deducted at source, provided their UK tax affairs are up to date and they do not expect to have any UK tax liability. The application is made on form NRL1 (individuals), NRL2 (companies) or NRL3 (trustees). Once approved, the letting agent or tenant pays the full rent without deduction and the landlord declares the income on their UK tax return in the normal way.
Book a free call with our team. We advise overseas property owners and letting agents on their UK obligations.
