UK Non Resident Landlord’s Tax Guide

If you live overseas you may find dealing with UK tax matters time consuming and confusing.

Learning about what you need to do means you are meeting your obligations as a non resident landlord and being as tax efficient as possible.

Our non resident landlord guide can help you only pay the tax you need to now and in the future.

Non resident landlord tax returns

UK non resident landlords normally need to complete a tax return. When you register with HMRC as a landlord you will be set up in the Self Assessment system. A tax return will need to be completed in each tax year unless you are told otherwise by HMRC. Your tax return will have to be completed on time and correctly unless penalties will be imposed.

UK non resident landlord tax rebate

If you paid tax on your rental income and earned less than the tax free allowance, you can claim a tax rebate. You can make a claim for the previous four tax years so you could be owed a substantial tax rebate. This is the case for many non resident landlords because they use a rental agent to collect their rental income. Tax is deducted by rental agents at a rate of 20% unless HMRC have allowed you to join the non resident landlord scheme.

Non resident landlord scheme

The UK non-resident landlord scheme (NRL Scheme) is operated by HMRC, and taxes the rental income of UK non-resident landlords. It means that UK letting agents deduct tax from any rental income collected for non-resident landlords.

If you’ve lived outside the UK for more than six months you’ll generally be classed as a non resident for the purposes of the scheme.

UK non-resident landlords can apply to receive any property rental income without UK tax deducted.

If you haven’t applied for this exemption, your letting agent should supply a certificate of tax liability each year to confirm that tax has been deducted from your rental income.

Landlord property expenses

As a landlord you can offset some of the costs of buying and running your property – such as mortgage interest and property repairs against the tax you need to pay. You do this using a Self Assessment tax return, where you must also declare any other income you earn in the UK.

Don’t miss out your landlord expenses

Not declaring your expenses means you won’t get the tax relief you are owed. In a similar way if you have any capital expenditure (for example fitting a bathroom of kitchen) this can used against any capital gains tax you may owe when you sell the property.

In addition non resident landlords should take into consideration if they are entitled to UK pension tax relief relating to tax paid on UK pension income and lump sums.

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