If you leave the UK whether temporarily or permanently and are renting property out then you’ll still be responsible for paying tax as a landlord. Now being a landlord isn’t the simplest thing in the world and being a non-resident landlord may seem simpler at first.
After all your tenants won’t be calling you if they have a leaky tap will they? However as a non-resident landlord you’ll still have to deal with tax issues. As a non-resident landlord you will be taxed on most sources of UK income and this importantly includes rental income.
It’s important to note that you will only be classed as a non-residential landlord if you live abroad for more than 6 months of the year. Now you’re probably wondering how you go about paying tax on your property income when you’re not in the country aren’t you? Well the tax office usually need a self assessment tax return to be submitted each tax year and your tax return will confirm how much your tax bill will be.
The Non-resident Landlord Scheme
The non-resident landlord (NRL) scheme was set-up by HMRC to allow for no tax to be deducted from your rental income. You need to apply by completing the NRL1 form and not everyone will be accepted on the scheme by HMRC. If you do not use the NRL scheme tax will automatically be deducted from your rental income by your letting agent.
Tenants
If your tenants pay you rent directly they have the right to deduct any tax they have paid under the NRL scheme from their rent. In addition they can also recover from the landlord any tax they have to pay under the scheme in cases where tax has not been deducted.
This also applies if you have a friend or family member acting as representative for you to your tenants. If you don’t need to pay tax on your rental income HMRC will tell you know after your rental income has been declared.
A tenant can apply to the non-resident landlord (NRL) scheme and will need to give HMRC their landlords name and address.
Letting Agents
If you utilise a letting agent to take your rental payments for you then you will need to register for the non-resident landlord (NRL) scheme unless HMRC as written to you to tell you that no tax will be deducted. However you may still be asked to fill out an annual tax return.
Letting agents can come in many different forms, they can be solicitors, estate agents, accountants and much more. As long as they’re acting as a representative for you and your property then they will be classed as a letting agent.
Rental Income and Expenses
Finally declaring what you should and on time is very important when you are a landlord. If you don’t you can miss out on the many valuable tax reliefs that are available to UK landlords now and in the future. HMRC can apply heavy penalties for late or incorrectly submitted tax returns meaning getting the right support is crucial.
