It can sometimes be tricky for HMRC to collect property tax from individuals who live outside of the UK, especially if they aren’t complying with their UK tax obligations. This is where the ‘Non-Resident Landlord Scheme’ comes in.

It puts the responsibility for collecting tax from any rental income on the tenant or letting agent. If you’re unsure whether you’re a non-resident landlord, this guide will talk you through all you need to know.

Am I a non-resident landlord?

To be classed as a non-resident landlord, you’ll be receiving UK rental income, but your ‘usual place of abode’ will be outside of the UK. ‘Usual place of abode’ sounds quite vague – but it basically means the place where you spend most of your time.

For example, you spend 7 months of the year at your home in France, and the rest of the time in the UK. It’s important to note that this is in relation to the Non-Resident Landlord Scheme (NRLS). You can be both a UK resident for other tax purposes, and a non-resident landlord under the Non-Resident Landlord Scheme (NRLS).

HMRC can write to your tenant at any time and ask them to operate under this scheme, even if you only meet one of the two conditions.

Can I apply to receive my rental income in full if I’m a non-resident landlord?

If you’d prefer to receive your full rental income without tax deducted you can ask HMRC, but you’ll need to meet the below conditions:

• Your UK tax affairs must be up to date (if you have any tax obligations)
• You aren’t expected to have any UK tax liabilities for the year you’ve made the application

You can ask HMRC for approval by filling out a form. It’s different depending on whether you’re an individual, company or trust.

• For individuals – you must complete a NRL1 form
• For companies – you’ll need a NRL2 form
• And for trusts – a NRL3 form

You’ll need to complete an authorising your agent form if you’d rather someone else do this for you instead.
 

What are my tenant’s or letting agent’s obligations?

If your tenant or letting agent need to operate under NRLS, they’ll need to:

• Register for NRLS – they must do this by filing an NRL4 form within 30 days from the date they were required to operate under the scheme.
• Complete quarterly returns – Your tenant or letting agent must deduct and pay tax to HMRC within 30 days of each quarter’s end. They can do this by using an NRLQ form. If you’ve applied to have no tax deducted, HMRC will write to your tenant or agent to let them know they no longer need to deduct tax.
• Provide an annual return (NRLY form) – They need to do this by 5th July each year.
• Issue a certificate to you each year – Your tenant or letting agent will issue a certificate (form NRL6) each year that includes the amount of tax they’ve deducted. You’ll need this information for your own tax return!

Can my tenant be exempt from this scheme?

Your tenant won’t have to operate under the Non-Resident Landlord Scheme if:

• The rent they pay is less than £100 per week (£5,200 or less per year)
• They don’t pay rent directly into your bank account (for example, they pay a letting agent, or they pay someone who is operating under the Non-Resident Landlord Scheme)

The tax year for NRLS runs from 1st April to 31st March. If your tenant has a contract shorter than a year, the figure is proportionately reduced. For example, if they have a 6-month tenancy agreement with you, they won’t need to operate under the scheme if their rent is £2,600 or less. Letting agents will need to operate under this scheme regardless of how much rent you charge per week.

How much tax will my tenant or letting agent deduct under NRLS?

Your tenant or letting agent will deduct tax at the UK basic rate, which is currently 20%.

Do non-resident landlords need to submit UK tax returns?

Yes, you’ll need to submit a tax return in the UK to tell HMRC about any UK property income you get. The deductions your tenant or letting agent make don’t take any tax allowances or other income into consideration, so the amount of tax you actually owe might be different. Submitting a tax return will allow you to settle any tax you owe or reclaim tax if you’ve paid too much.

The way you keep records and report your income to pay tax on it depends on your circumstances. Our table below explains what you need to do.
 

Self Assessment tax returns for non-resident landlords

If you are an individual non-resident landlord receiving rental income then yes, you’ll need to complete a Self Assessment to report your UK property income – just like any other landlord based in the UK.

Making Tax Digital for Income Tax and non-resident landlords

The rules around keeping records and reporting income are changing in the UK, but this depends on your level of qualifying income. For non-resident landlords this only includes your UK earnings from self-employment and property.

If you’re not a UK resident, but the total amount of income you get from self-employment or property in the UK is more than £50,000 in 2024/25, you’ll still need to submit a Self Assessment tax return for the 2024/25 tax year – but you must follow the rules for MTD Income Tax from April 2026 onwards.

Can a company be classed as a non-resident landlord?

Yes. If you run a company with properties in the UK, you’re considered a non-resident landlord if:

• Your main office is outside of the UK
• Your business is incorporated outside of the UK

Non-UK resident company landlords pay Corporation Tax on UK property through a Company Tax Return – like UK resident companies.

Are non-resident landlords entitled to the tax-free Personal Allowance?

Non-resident landlords are entitled to a tax-free Personal Allowance if they meet any of the following conditions:

• They hold a British passport
• They’re a citizen of an EEA country
• They’ve worked for the UK government during that tax year

You may also be entitled to it if it’s in the double-taxation agreement between your country and the UK.

Will my tenant or landlord take my personal allowance into consideration?

No. Under the Non-Resident Landlord Scheme (NRLS), your tenant or letting agent is required to deduct basic rate tax (20%) from your net rental income, regardless of whether you’re entitled to the personal allowance.

If you are eligible for this allowance, it may be more beneficial applying to HMRC to receive your gross rental income, or you can wait to receive a tax rebate once you’ve submitted your tax return.

 
We know the rules around the Non-Resident Landlord Scheme are complicated, so let us help! You can reach us on 020 3355 4047 or get an instant online quote.