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I am an overseas landlord, what will be my tax implications?

Basically all residents from within the UK is obliged to pay tax from the rental incomes. However, if you are a non-resident landlord and have stayed outside the UK for almost 6 months then there may be special rules regarding the tax application on the rental incomes.

A special scheme called the Non-Resident Landlord or NRL is intended specifically for non-residents of the UK and is operating a rented property, this scheme is operated by HMRC’s Centre for Non-Residents and is applicable to all rental incomes paid after April of 1996. This scheme functions by deducting the tax from your income by your tenant or agent before the payment for the rent is given to you, unless there is a written notification that the payment needs to be sent gross.

Your agent or tenant must deduct tax from your rental income and this must be submitted to the HMRC on a quarterly basis. A deduction report is also required to be submitted to the HMRC including a Certificate of Tax Liability to you, the landlord.

To be able to register as a Non-Resident landlord and receive rental incomes without deductions you can visit the HRMC site and fill out the NRL 1 Form. The timeframe of approval depends on your tax history, if you have a poor rate of tax history then the approval will take time. When the confirmation is received by your tenant or an agent from the NRL approving your application then they will absolutely give you your gross rental income. You need to get a separate approval for every agent or tenant you use.

For instance, if the tenant is paying directly to you then you can ask them to register with the HRMC and deduct tax from your income before depositing it to your bank.