The Non-resident Landlords Scheme (NRL Scheme) requires income tax at the basic rate to be deducted from rental payments due to non-resident landlords in respect of a UK property business and accounted for to HMRC. The NRL Scheme must typically be operated by:

1. •

   letting agents (regardless of the amount of rent involved), or

2. •

   if the landlord does not have a letting agent, tenants (paying rent of more than £100 per week (or £5,200 per year) or where there is occupation for less than one year a proportionate sum determined by reference to the duration of their occupation or who is notified by HMRC that they should operate the NRL Scheme)

HMRC publishes detailed guidance notes for letting agents and tenants in relation to the operation of, and their obligations under, the NRL Scheme (referred to collectively herein as the ‘Guidance Notes’).

In calculating the tax, the letting agent or (in limited circumstances) the tenant may deduct certain expenses. These deductible expenses are similar to (but more limited than) the allowable expenses when computing property income.

Under