Non-Resident Landlord Remember to Apply for Tax Relief

Non resident landlords are landlords who live overseas for longer than six months and rent out properties in the United Kingdom. They must pay tax on rental income.

There are downsides to being an overseas landlord

It can be tempting to manage your property yourself from overseas, but there are many drawbacks to doing so. You will need to deal with void periods and changes in legislation, Section 24, maintenance issues, and late rent payments. This can be time-consuming and stressful. This can be even more frustrating if you live in a different time zone, or in an area with slow internet connectivity.

Non-resident landlords have one major disadvantage. If you live abroad for more than six months and want to receive your rental income in full you will need to declare that you are a nonresidential landlord with HMRC. Your letting agent or your tenant will withhold a portion of your tax.

HMRC’s Non-Resident Landlord Scheme

HMRC will require your tenant or letting agent to deduct basic tax from your rent if your weekly rent is more than PS100.

It’s worth declaring your overseas residency with HMRC as many tenants are unaware of the requirement. This will enable you to pay tax on rental income via Self Assessment. You can do this by submitting an application for UK rental income with the NRL1i form.

HMRC will approve your application to Non Resident Landlord Tax UK status. If this happens, your tenant or letting agent will be told by HMRC not to deduct any tax from your rent. You’ll also need to declare your income on your Self Assessment tax return.

Based on our experience working with tenants, we know they are just as busy as landlords. Once they have found the right property, passed the reference checks and paid the deposit, set up monthly direct debits to cover the rent payments, the last thing they want is to have to contact HMRC to get the landlord the additional tax.

International landlords can get help

It is important to seek expert landlord advice if you are thinking of moving abroad or renting your home.

Apart from the tax implications, landlords need to be aware of certain aspects of leasing a property.

Section 48 Landlord and Tenant Act require that you give your tenants a UK contact address so that they can send you notices. You can have your mail monitored and a non-resident landlord address provided by us.

Managing rent payments If your tenants are consistently late or more than 8 weeks behind on their rent payments, you may have the ability to issue a notice to evict them. Rent on Time Platinum will pay your rent every month regardless of whether your tenant fails to do so.

Before the tenant moves in, you must provide a Gas Safety Certificate to them. This certificate must be renewed annually.

To ensure that the tenant can reach someone for assistance after hours, you must provide an emergency phone.

Summary

Agents acting for non-resident landlords are required to register with HMRC. They must calculate the tax for each quarter at the basic rental income rate after deducting any deductible expenses, and account for any tax that is deducted to HMRC.

A certificate must be provided by the letting agent to the non-resident landlord to confirm the amount of tax that was deducted and transferred to HMRC for each year.