Who counts as a landlord abroad
The Non Resident Landlord Scheme looks at where you usually live, which HMRC calls your usual place of abode. That is not the same test as tax residence, so it is possible to fall inside the scheme while still being UK resident for other purposes, or the other way round.
A short spell overseas does not count. HMRC's own guidance says someone living abroad only temporarily, for around six months or less, is not treated as having a usual place of abode outside the UK. A two year posting to Singapore or a permanent move to Spain is a different matter.
We often meet people who took a job abroad and kept their house in Croxley Green or Oxhey to let rather than sell. Others bought a flat near Watford Junction years ago as an investment and have since moved away. Non resident landlord tax rules apply to all of them in the same way.
How tax is taken from your rent
If a letting agent collects your rent, the agent must deduct basic rate tax from the rent after allowable costs and pay it to HMRC. If there is no agent and the rent is more than £100 a week, the tenant has to do the deducting instead. Many tenants have no idea about this rule until something goes wrong.
The agent or tenant pays the tax to HMRC each quarter, within 30 days of the quarter end. After the tax year they send HMRC an annual return and give you a certificate showing the tax taken by 5/7. Keep that certificate, because you need it for your own return.
What is included
- NRL1, NRL2 and NRL3 applications
- Annual UK self assessment returns
- Personal allowance claims for non residents
- Checking agent deductions and certificates
- 60 day property sale returns
- Rebasing calculations for older properties
- Corporation tax returns for overseas companies
- Let Property Campaign disclosures
Applying to receive your rent in full
You can ask HMRC for approval to receive rent with no tax deducted. Individuals use form NRL1, companies use NRL2 and trustees use NRL3. HMRC approves the application if the form is complete and correct and it is satisfied that you will meet your UK tax obligations.
Approval is not an exemption from UK tax. It only changes how the tax is collected. You still pay UK tax on your rental profit through a return, so approval mainly helps your cash flow and stops tax being taken on rent that is already covered by your allowances or costs.
Your non resident landlord tax return each year
Most landlords abroad still need a UK self assessment return, due online by 31/1 after the end of the tax year. The return shows your rent, your costs and any tax the agent or tenant deducted, which is set against your bill. If too much was taken, the difference comes back to you.
Whether you get the UK personal allowance depends on your nationality and any tax treaty between the UK and the country you live in. British citizens and citizens of EEA countries usually qualify, and non residents claim it each year. The mortgage interest rules are the same as for UK landlords, so finance costs give you a basic rate credit rather than a deduction.
If you own the property through a company based outside the UK, the company pays corporation tax on its UK rental profits rather than income tax. We handle the return and the NRL paperwork for companies as well as individuals.
Selling a UK property while living abroad
Non residents must report the sale of UK property or land to HMRC within 60 days of completion, even if no tax is due. Any tax owed must also be paid within those 60 days. This catches out people who assume a small gain, or a loss, needs no paperwork.
For residential property you owned before 6/4/2015, the gain is usually worked out from the value at 5/4/2015, although other methods are available and one may give a better result. A local valuation from that date helps, so it is worth asking a Watford estate agent for one early.
Putting missed years right
It is common for people who moved abroad to fall behind on non resident landlord tax and stop filing UK returns, often because they assumed the agent's deductions settled everything. If that sounds familiar, HMRC's Let Property Campaign lets landlords come forward and disclose unpaid tax on better terms than waiting for HMRC to find them. We work out what is owed for each year, prepare the disclosure and deal with HMRC for you.
All of this can be done from wherever you live. We work by email and video calls across time zones, and you never need to fly back to Hertfordshire to sort out your tax.
Who this suits
- People who moved abroad and kept their Watford home to let
- Overseas investors with flats in Hertfordshire
- Expats on long work postings
- Families who inherited a UK property while living abroad
- Overseas companies holding UK rental property
Common questions
I am moving abroad for work. Should I tell my letting agent?
Yes. Once you usually live outside the UK, your agent has to start deducting basic rate tax from your rent unless HMRC has approved you to receive it in full. Applying early means your rent can carry on arriving without deductions.
My tenant pays me directly. Do they have to take tax off?
If there is no letting agent and the rent is more than £100 a week, the tenant must deduct basic rate tax and pay it to HMRC. That stops once HMRC approves you to receive rent in full and tells the tenant.
Does the scheme apply if I am only abroad for a few months?
Usually not. HMRC guidance treats someone living abroad temporarily, for around six months or less, as still having a usual place of abode in the UK. Longer moves are judged on the facts.
Will I get a UK personal allowance while I live in Dubai?
If you are a British citizen, you usually can. Citizens of EEA countries and some people covered by tax treaties also qualify. You claim it each year, and it can wipe out tax on a modest rental profit.
Can my letting agent file my tax return?
The agent files its own annual NRL return about the tax it deducted, but that is not your personal return. You still need a UK self assessment return showing your rent and costs, which we can prepare.
Can I still claim repairs and agent fees while I live abroad?
Yes. The same allowable costs apply as for a landlord living in the UK, including agent fees, insurance and repairs. Your agent takes off the costs it pays before working out the tax to deduct, and anything you pay yourself goes on your own return.
Do I pay tax if I sell my Watford house while living overseas?
Non residents can pay UK capital gains tax on UK property, and every sale must be reported within 60 days of completion even with no tax due. For homes owned before 6/4/2015 the gain usually runs from the 5/4/2015 value.
I own the flat through a company abroad. What changes?
The company applies for approval on form NRL2 and pays corporation tax on its UK rental profit rather than income tax. It still needs proper accounts and a UK company tax return.