Non-resident landlords scheme

The Non-resident Landlords Scheme is a way of collecting tax due on the UK rental income of non-resident landlords (those who own property in the UK, but do not live in the UK).

Moving abroad and letting out your home or another UK property?

If you are moving abroad but are going to rent out your old home, or any other UK property, it is important to realise you remain liable to UK tax on those rents and will still need to complete self assessment tax returns.

You will also need to consider if you want to register for the non resident landlords’ scheme. If you do not register, your tenant or letting agent will deduct tax from the rent you are due to get. You then claim to offset this tax against any tax owed on your self assessment return.

You can register to get your rent without tax taken off. You need to contact HMRC here:

http://www.hmrc.gov.uk/cnr/nr_landlords.htm#10

Landlord who does not live in the UK?

The non resident landlords scheme will also affect you if your landlord does not live in the UK.

1. If you rent your property through a letting agent they will deal with this.
2. If you live in a house owned by someone from overseas and pay rent direct to them:

If you live in a house owned by an overseas landlord and the rent is more than £100 per week, you should contact HMRC. HMRC may ask you to deduct basic rate tax (20%) from your rent before you pay it to your landlord. You would pay the tax deducted to HMRC on behalf of your landlord.

When working out how much tax to deduct, tenants and rent collectors may deduct expenses which are allowable against letting income as outlined above.

The obligations you have as a tenant of an overseas landlord, where there is no letting agent, can be quite demanding. They are set out in detail here:

http://www.hmrc.gov.uk/cnr/nr_landlords.htm#40Non-resident landlords may apply to HMRC to have the rent paid without deduction of tax. In this case HMRC will notify the letting agent or tenants that they should not deduct tax. However, the landlord is still liable to pay tax in the UK on the income they are receiving from letting their UK property.  Whether or not tax has not been deducted at source (i.e. by tenants or rent collection agent), the non-resident landlord has to complete and submit UK tax returns.  The process for this is exactly the same as for UK residents.

More details about the scheme can be found at http://www.hmrc.gov.uk/cnr/nr_landlords.htm 

You run a property business and collect rent on behalf of overseas landlords

If you collect rent on behalf of an overseas landlord, you should contact HMRC and may be required to deduct basic rate tax from rent you collect for landlords who do not live in the UK.