What are the tax implications of being an overseas landlord?
Anyone who owns property in the UK is required to pay tax on any rental income that they may receive and there are special rules that apply to the rental income of non-resident landlords, or those whose usual home is outside of the UK for 6 months or more of the year.
The NRL (Non-Resident Landlord) scheme is operated by HMRC's CNR (Centre for Non-Residents) and applies to all rental income paid on or after April 1996.
Under this scheme your agent or tenant must legally deduct tax from your rental income before sending payments to you, unless they receive written notification from HM Revenue and Customs for payments to be sent gross.
When your agent or tenant does deduct tax from your rental income they must submit this to HMRC on a quarterly basis and submit a report of deductions to HMRC and a Certificate of Tax Liablity to yourself annually.
To register with HMRC as a Non-Resident landlord and receive rental income without deductions (gross) you must apply for approval by visiting www.hmrc.gov.uk and completing an NRL1 Form. Approval will usually be granted unless you have a poor tax history or your UK tax affairs are not up to date. Once your tenant or letting agent receives confirmation of your NRL approval they will be able to pay your rental income gross. (HMRC will send them a confirmation letter to advise that it is ok for them to send you rent directly without deduction, once you are approved) You need to gain a separate approval for each agent you use, or tenant if they are paying you directly.
If your tenant pays rent directly to you (and the rent is more than £100 per week) you must instruct them to register with the HMRC and deduct tax from your income before they pay it into your bank. The tenant can register by contacting 03000 516 644 or via www.hmrc.gov.uk
29th June 2016
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