If you have a rental property in the UK but live abroad for a period of six months or longer, you qualify as an overseas landlord. It’s essential to register with HMRC and stick to the Non-Resident Landlords (NRL) scheme, which has all the guidelines for tax payment. Under this scheme, UK letting agents are obligated to withhold basic rate tax from rents collected on behalf of non-resident landlords. This deducted amount can later be offset against your own tax liability at the conclusion of the fiscal year.

If we, or any other agent, collects rent for a Non-Resident Landlord, we’re legally obligated to withhold 20% of the net income and remit payments to Inland Revenue on a quarterly basis.

When a Non-Resident Landlord directly receives rent from a tenant, the tenant is obligated to deduct 20% of the net income and submit quarterly payments to the Inland Revenue. Tenants paying less than £100.00 a week directly to a Non-Resident Landlord are exempt from withholding tax but must annually report the rent paid to HMRC.

Non-Resident Landlords seeking an exemption from tax deduction by their letting agent can apply to the Inland Revenue using the NRL1 form. However, approval of an NRL1 does not exempt the rent from UK tax, and non-resident landlords must include it in any tax return provided by the Inland Revenue.

Whilst profits remain taxable, receiving gross payments may enhance cash flow for the landlord.

It's important to note that if a property is jointly owned, each owner must individually complete their NRL1 application form.

Landlords should seek independent advice on this matter from an accountant.