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What is the Non Resident Landlord Scheme?

The tax office has a scheme called the non resident landlord scheme which allows non resident landlords to opt out of having income tax automatically deducted from their rental income.

Via a rental property agent or tenant HMRC automatically collects a 20% tax from a non resident landlords rental income.

Depending on the level of your overall UK income the 20% tax deducted could result in you overpaying income tax.

The NRL scheme can be used to reduce any tax you are paying in the UK and you can also claim back any overpaid tax deducted from your rental income from the previous four tax years.

What is a non resident landlord?

A non resident landlord is someone who has a house, flat or any other property in the UK and rents this out whilst living abroad.

Non resident landlords will have to pay UK tax on any taxable profits from their rental income at the appropriate rate of income tax.

Who can use the NRL Scheme?

A person who lives abroad and rents out a property in the UK can apply to the non resident Landlord Scheme. HMRC must agree that the person is non UK resident.

Your residence is decided by your usual place of abode for the purposes of the NRL scheme.

Usually, if a person is away from the UK for a minimum of 6 months, their usual place of abode will be deemed to be outside of the UK and so they can apply to the non resident landlord scheme.

You should ensure that you are not liable for any outstanding tax payments and you expect to remain a non resident landlord until the end current tax year at minimum.

How to apply to the NRL Scheme: Form NRL1

In order to apply to this scheme, the form ‘NRL1’ must be completed. The form NRL1 tells the tax office what they need to know to be able to make a decision on your application.

The NRL1 can be either completed online or downloaded and posted to HMRC.

HMRC will process your NRL1 form and give you confirmation on their decision.

What happens on the NRL Scheme?

If you get accepted onto the scheme, the tax office will communicate with your letting/managing agent to inform them that the non resident landlord has been approved to receive rents without tax deductions.

You as the non resident landlord will also receive confirmation of this approval.

This notice means that the letting agent no longer has to collect and pay to HMRC tax from your rental income.

Instead you’ll get your rental income with no tax deducted. Usually this is backdated to the start of the quarter in which the NRL1 was received.

Do I still need to fill in a non resident tax return?

If the tax office sends you a tax return you still need to submit a tax return and declare your rental income received in the UK even if you haven’t paid any tax on it.

In some circumstances if your application to the non resident landlord scheme has been successful you will not need to fill in a tax return. The tax office will notify you if this is the case.

Can I claim the tax I have paid in previous years?

A claim for the tax you have paid on rental income can be backdated for the last four tax years only.

Non resident landlords typically complete a self assessment tax return and any refund of overpaid tax will be calculated and repaid after your tax return is submitted to HMRC.

If you have paid non resident landlord tax in a year where you have not completed a tax return and not been accepted on the NRL scheme you will not automatically be refunded any overpaid tax.

A separate tax rebate claim will need to be made in writing to:

Charities, Savings and International 1
HM Revenue and Customs
BX9 1AU
United Kingdom

Non resident landlord tax return support

Navigating the responsibilities of being a non resident landlord in the UK can be quite daunting particularly if you are attempting to manage your tax matters independently.

It is crucial to familiarise yourself with the topic in order to ensure that you are meeting your obligations and properly reporting your rental earnings to HMRC.

The completion of a non resident tax return isn’t possible on HMRC’s free software meaning it can only be done by using third party tax return software or an accountant.

Using a non resident accountant can help you minimise your income tax and capital gains tax liability in the UK so it’s worth considering employing the support of a paid for professional.

Non resident landlords can phone HMRC for advice and support about the NRL scheme on:

Telephone inside the UK:
0300 322 9433