Although the UK does not generally tax non-residents (see the How to establish if a company is UK resident and Residence ― overview guidance notes), it does apply tax in respect of UK source income, and in particular in respect of rental income from UK properties.

Prior to 6 April 2020, all non-resident landlords (NRL) (including both companies and individuals) were subject to income tax on the rental income. Non-resident companies were subject to a flat rate of income tax of 20% on the property income. Depending on the level of the income, non-resident individuals were subject to tax at the default income tax rates of 20%, 40% or 45%.

From 6 April 2020, non-UK resident companies are chargeable to corporation tax rather than to income tax on profits of a UK property business and ‘other UK property income’. For more information on the changes, see the Non-resident landlords ― rules for companies from April 2020 guidance note.

Without special provisions, non-UK resident landlords could evade the UK tax charge on their property income by