Non-Resident Landlord Scheme: Tax for Overseas Owners

What Is the NRL Scheme?

The Non-Resident Landlord (NRL) Scheme applies to landlords whose "usual place of abode" is outside the UK. Under the scheme, letting agents (or tenants, if there is no agent) must deduct basic rate tax (20%) from rental payments and send it to HMRC quarterly.

This is similar in concept to CIS deductions — tax is collected at source rather than waiting for a tax return.

Who Does It Apply To?

The NRL Scheme applies if:

• You own UK rental property
• You live outside the UK for more than six months per year (or your usual place of abode is abroad)

It applies whether you are a UK citizen living abroad or a foreign national.

How It Works

With a Letting Agent

Your letting agent deducts 20% from your rental income (after deducting allowable expenses they have paid) and sends it to HMRC quarterly. They send you the net amount.

Without a Letting Agent

If you do not use a letting agent, your tenant is responsible for deducting and paying the tax — but only if their rent exceeds £100 per week. In practice, most NRL landlords use agents to avoid burdening tenants.

Applying for Gross Payment

You can apply to HMRC to receive rental income gross (without deductions) if your UK tax affairs are up to date. This is done using form NRL1 (for individuals).

HMRC will approve gross payment if:

• You have always complied with your UK tax obligations
• You do not expect to be liable to UK tax
• You are up to date with all UK tax returns and payments

Even with gross payment approval, you must still file a UK Self Assessment tax return declaring your rental income.

Self Assessment Obligations

Regardless of whether tax is deducted at source or you receive gross payment, you must file a UK Self Assessment tax return. The 20% deductions are credited against your final tax liability. If you have paid too much (after expenses), you can claim a refund.

Double Taxation

If you pay tax on UK rental income in your country of residence, a double taxation agreement may prevent you from being taxed twice. You would typically receive a credit in your country of residence for UK tax paid.

Track your UK rental income and expenses with Accounted regardless of where you live.

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