The Non-Resident Landlord Scheme (NRLS)
If you live abroad for 6 months or more per year and receive rental income from a UK property, you're considered a 'non-resident landlord'. This guide explains the special tax rules you need to be aware of.The Non-Resident Landlord Scheme (NRLS) is a scheme for taxing the UK rental income of landlords who live overseas.
How does the scheme work?
By default, your letting agent (or tenant, if you don't have an agent) is required to deduct basic rate tax from the rent they collect on your behalf. They then pay this directly to HMRC.
This means your rental income is being taxed at source before you even receive it.
Can I receive my rent without tax being deducted?
Yes, you can. You can apply to HMRC for approval to receive your rental income 'gross' (with no tax taken off). You do this by filling in an NRL1i form.
If HMRC approves your application, they will tell your letting agent not to deduct tax.
This doesn't mean you don't have to pay tax!
It just means you are now responsible for declaring your rental income and paying the tax yourself through a Self Assessment tax return.
Getting approval is usually the best option as it gives you much better control over your cash flow and allows you to factor in your allowable expenses before calculating the tax you owe.