Using the Non-resident Landlord Scheme

The Non-Resident Landlord Scheme is a special arrangement for landlords who reside outside the United Kingdom and earn rental income from properties within the UK.

This scheme applies not only to individuals but also to companies and trustees whose primary residence, or "usual place of abode," is situated outside the UK. According to HMRC guidelines, a person is classified as a non-resident landlord if they live abroad for six months or more each year.

Typically, the rental income paid to a non-resident landlord is subject to a tax deduction at the basic rate of 20%, which is applied to the rent after any allowable expenses have been deducted. This tax is either collected by a letting agent or, in the absence of an agent, directly by the tenants. The deducted tax is then submitted to HMRC within 30 days following the end of each tax quarter. This ensures that the UK tax authorities receive the correct amount of tax on the income generated from the rental property.

However, the Non-Resident Landlord Scheme offers an alternative for landlords who wish to receive rental payments without tax being deducted at source. Through the scheme, non-resident landlords can apply to HMRC for approval to have their rental income paid in full, without any tax withheld. To be eligible for this, the landlord must demonstrate that they are meeting their UK tax obligations and provide accurate information as required by HMRC. It is important to note that HMRC retains the right to refuse an application if it believes the information provided is inaccurate or if there are concerns that the landlord may not comply with their tax responsibilities.

If you need tax advice, give our expert and friendly team a call on 01380 723692 or email us here.