If you live outside of the UK, but you own and let property in the UK you are an overseas landlord, and there are regulations that apply to how you pay tax.
The information below aims to outline the regulations that overseas landlords must comply with, but if you have any questions do speak to one of our expert lettings advisors.
Section 42a Income and Corporation Tax Act 1988 and Taxation of Income from Land (Non-residents) Regulations 1995, SI 1995 No 2902.
For Landlords who live abroad the Reeds Rains Full Management Service is available, the Let Only service cannot be used. Overseas landlords are regarded as non-UK residents for tax purposes, and need to apply to the Inland Revenue for Non-Resident Landlord status. A landlord that has already been approved to receive rents without deduction of tax from the Inland Revenue must contact the Inland Revenue and request that an NRL8 (approval notice) be issued to Reeds Rains Ltd. Reeds Rains House, Chorley West Business Park, Ackhurst Road, Chorley, Lancashire, PR7 1NL. A landlord who does not hold approval will need to apply to the Inland Revenue to be approved for the non-resident landlord scheme. If the application is successful the Inland Revenue will issue an NRL8 to Reeds Rains Ltd. Reeds Rains Lettings Centres hold forms for this (NRL1) and will guide landlords through the whole process if required. The Inland Revenue issues the following notes as a guide to this scheme.
The Non-resident Landlords Scheme is a scheme for taxing the UK rental income of nonresident landlords. The scheme requires UK letting agents to deduct Basic Rate tax from any rent they collect for non-resident landlords. When working out the amount to tax, the letting agent can take off deductible expenses. Letting agents don’t have to deduct tax if the Inland Revenue tells them not to. The Inland Revenue will tell an agent not to deduct tax if non-resident landlords have successfully applied for approval to receive rents with no tax deducted. But even though the rent may be paid with no tax deducted, it remains liable to UK tax. So nonresident landlords must include it in any tax return the Inland Revenue sends them.
Most applications are dealt with within two weeks (the Inland Revenue Centre for Non- Residents aims to approve 95% of all applications within this time).