A landlord who lives abroad for more than 6 months of the year must pay tax on any income they get from renting out property in the UK. The tax is collected using the Non-resident Landlord Scheme.
Tax will need to be deducted from rent if you are:
- a letting agent with a landlord resident abroad renting property in the UK: or
- a tenant with no letting agent who pays over £100 a week in rent to a landlord who lives abroad.
If you are a letting agent you must operate the Non-Resident Landlord Scheme no matter how much rent you collect, unless HMRC has told you in writing that the landlord can receive the rent with no tax deducted.
Anyone operating formally as a letting agent with Non-Resident landlords need to apply for the scheme. You are also considered a letting agent under the scheme if you have lived in the UK for more than 6 months and are helping a Non-Resident landlord run their rental business. A letting agent can be an estate agent, solicitor, accountant or friend of the landlord.
You need to complete form NRL4i to register for the scheme within 30 days of the start of the tenancy.
If you are a tenant you will need to register with HMRC for the Non-resident Landlord Scheme and deduct tax from your rent, unless HMRC has told you in writing that the landlord can receive the rent with no tax deducted, but you must still register with HMRC and complete an annual report.
Form NRYL (Non-Resident Landlords Scheme – Annual information return) must be completed by the 5 July following the end of the tax year if you are:
- A letting agent acting for non-resident landlords, even if you have not deducted any tax under the Non-Resident Landlords Scheme;
- A tenant who has deducted tax under the scheme.
To complete the form go to www.gov.uk/government/publications/non-resident-landlord-annual-information-return-nrly.
In addition you must also provide your landlord with a certificate NRL6 each year by 5 July. https://www.gov.uk/government/publications/non-resident-certificate-of-tax-liability-to-be-provided-to-non-resident-landlords-by-uk-letting-agents-or-tenants-nrl6
If you would like more information on the Non-Resident Landlord Scheme please speak to out Tax Director, Jenny Marks.
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