Non-Resident Landlord Tax in Kent

How the Non-Resident Landlord Scheme works

If your usual place of abode is outside the UK, HMRC treats you as a non-resident landlord for this scheme. That generally means living abroad for six months or more a year, and it applies regardless of your formal tax residence status. Under the scheme, the person paying your rent has to collect tax for HMRC:

• Letting agents must deduct basic rate tax from the rent they collect for you, after allowing for expenses they pay on your behalf.
• Tenants without an agent must do the same if the rent is more than £100 a week.

The agent or tenant pays the tax to HMRC and should give you a certificate each year showing what was deducted. That tax is a credit against your final UK liability, not the end of the matter. HMRC summarises the rules in its guidance on rental income for people living abroad.

Receiving rent without deduction

You can apply to HMRC to receive rent gross, without tax being deducted. Individuals use form NRL1, companies NRL2 and trustees NRL3. HMRC will not approve an application if your UK tax affairs are not up to date, for example if returns or payments are late. Once approved, HMRC tells your agent or tenant to stop deducting, and you take responsibility for filing returns and paying any tax due.

Receiving rent gross often helps cash flow, particularly where mortgage interest or repairs mean your actual tax bill is low. We review whether it makes sense for you, prepare the application and deal with HMRC's questions.

Your UK tax returns

Whether or not tax is deducted at source, most non-resident landlords need to file a UK Self Assessment tax return, or a company return if the property is held by a company. On the return we:

1. prepare rental accounts from your agent statements and your own expense records;
2. apply the finance cost rules for residential property;
3. claim credit for tax deducted under the scheme;
4. consider whether you are entitled to a UK personal allowance as a non-resident;
5. flag any double tax relief points so your home country tax can be dealt with by your adviser there.

Selling UK property while living abroad

Non-residents must report every sale or disposal of UK property or land to HMRC within 60 days of completion, even if there is no tax to pay. This catches many overseas owners out. Our capital gains tax on property service handles the calculation and the report.

What we'll need from you

Your UTR if you have one, letting agent statements and NRL certificates, details of mortgage interest and other costs, and the country where you now live. If you are about to move abroad, talk to us before you go so the NRL position is set up correctly from the first rent payment. Landlords with several lets may also find our landlord accounts and tax returns page useful.

Kent properties, owners anywhere

Many of our non-resident clients own homes in Kent that they let after moving overseas, while others hold property across the UK. Everything can be handled remotely. Send us a message and tell us where you live and where your properties are.