Non-Resident Landlord Scheme: How Tax on UK Rent Works From Abroad
If you rent out UK property while living abroad, HMRC treats you as a non-resident landlord, and your rent is taxed under special rules. Either your letting agent or tenant deducts tax before they pay you, or HMRC lets you receive the rent in full and you pay through Self Assessment. This guide explains how the scheme works, how to apply to be paid in full and what to file. It sits alongside our guide to expat mortgages for anyone who lets a UK property.
This guide is general information, not tax advice. Rules and forms change and depend on your circumstances, so check GOV.UK or take advice from a UK tax adviser.
The short answer
- You pay UK tax on rent from UK property whatever your nationality or where you live.
- If you are abroad for six months or more a year, HMRC classes you as a non-resident landlord, even if you are a UK resident for tax purposes.
- By default, your letting agent or tenant deducts basic rate tax from the rent and pays it to HMRC.
- You can apply to receive rent in full and pay through Self Assessment instead, using form NRL1i.
Who is a non-resident landlord
According to GOV.UK, if you live abroad for six months or more per year you are classed as a non-resident landlord by HMRC, even if you are a UK resident for tax purposes. The scheme covers individuals, companies and trusts. A company is a non-resident landlord if its main office or business premises is outside the UK, or if it is incorporated outside the UK. A trust is one if all its trustees usually live outside the UK.
The two ways your rent is paid
1. Rent with tax deducted
Your letting agent or tenant deducts basic rate tax from the rent, after allowing for any expenses they have paid, and passes it to HMRC. At the end of the tax year they give you a certificate showing how much tax they deducted. If you do not use a letting agent and your tenant pays you more than £100 a week in rent, the tenant deducts the tax.
2. Rent in full
If you would rather receive the rent in full and pay tax through Self Assessment, you apply to HMRC using form NRL1i. If HMRC approves, it tells your agent or tenant not to deduct tax, and you declare the income on your tax return. HMRC will not approve an application if your taxes are not up to date, for example if you are late with returns or payments. Many landlords prefer this route because it avoids waiting for a refund if tax is over-deducted.
A worked example
This example uses invented figures and an assumed basic rate of 20%. It is not tax advice. Your agent collects £12,000 of rent in a year and pays £1,800 of allowable costs. Tax is deducted on the profit of £10,200, which at 20% is £2,040. You receive £12,000 less £1,800 less £2,040, or £8,160, and the agent gives you a certificate for the £2,040. You still declare the rent on your return, where your allowances and other income decide whether the deduction was too much or too little.
Steps to apply to be paid in full
- Make sure your tax returns and payments are up to date.
- Complete form NRL1i, or NRL2i for a company or NRL3i for a trust.
- Send it to HMRC.
- If HMRC approves, it tells your letting agent or tenant not to deduct tax.
- Declare the rent on your Self Assessment return and pay the tax through that route.
Filing your tax return
You still need to declare your rental income on a Self Assessment return unless HMRC tells you not to. GOV.UK says non-resident landlords cannot use HMRC’s online service for this. You send the return by post, use commercial software, or get a professional to file it. You complete the residence section (form SA109 if you post it) and the UK property section (form SA105). The deadline is earlier if you post your return, on 31 October, and you can be fined if you miss it.
If too much tax was deducted
If your rental income is below your Personal Allowance and basic rate tax was deducted, you can ask for a refund using form R43. You cannot claim if you are not eligible for a Personal Allowance. Whether you are eligible depends on your circumstances, so ask a tax adviser.
Companies and trusts
A company that is a non-resident landlord uses form NRL2i to ask to receive rent in full, and a trust uses form NRL3i. A company that is resident in the UK for tax purposes receives its rent in full, which includes UK branches of overseas companies registered for Corporation Tax.
Costs you can set against the rent
Letting agent fees, repairs, insurance and similar running costs can generally be set against the rent. Finance costs such as mortgage interest are treated differently for individual landlords from other expenses, so check GOV.UK’s guidance on paying tax on rental income, or ask an adviser, before you work out your profit.
Tax in your country too
The country where you live may also tax the rent. A double tax treaty may reduce the double charge, and GOV.UK has a section on claiming relief if you are taxed twice. Our other tax guide for landlords, on capital gains tax when you sell UK property from abroad, covers the other side of owning UK property.
Common mistakes
- Assuming the agent’s deduction means you have no return to file.
- Applying to be paid in full while a tax return or payment is overdue, which can lead to refusal.
- Using the wrong form for a company or trust.
- Missing the earlier 31 October deadline for a postal return.
- Forgetting that your home country may tax the rent as well.
Related reading
For the practical side of letting, see our guides to letting your UK home from abroad and getting an expat buy-to-let mortgage. For the wider picture, see our expat financing hub, our page on UK expat mortgage options and our overview of property finance for expats. If you need to raise money against a let property, see our page on a secured loan against UK property.
Frequently asked questions
Who is a non-resident landlord?
Someone who lives abroad for six months or more a year and rents out UK property. It applies even if you are a UK resident for tax purposes, according to GOV.UK.
Does tax get deducted from my rent?
By default, yes. Your letting agent or tenant deducts basic rate tax unless HMRC has approved you to receive rent in full.
How do I receive rent without tax deducted?
Apply to HMRC using form NRL1i. If approved, you declare the income on your Self Assessment return. HMRC will not approve you if your taxes are not up to date.
Do I still file a tax return if tax is deducted?
Yes, unless HMRC tells you not to. You declare the rent on a Self Assessment return.
Can I get a refund if too much tax was deducted?
If your rental income is below your Personal Allowance and basic rate tax was deducted, you can claim using form R43, provided you are eligible for a Personal Allowance.
What if I own the property through a company or trust?
Different forms and rules apply. A non-resident company uses form NRL2i and a trust uses form NRL3i to ask to receive rent in full.
Sources and further reading
This article is for information only and is not tax or financial advice. Rules, forms and deadlines change. Check GOV.UK or take regulated advice before you rely on this guide.
