The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
Although the UK does not generally tax non-residents (see the Residence of companies 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 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’. The position for NRL that are not companies is unchanged. For more information on the changes, see the Non-resident landlords ― transitional 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 virtue of their absence and non-declaration of this income. Therefore, NRL are subject to the provisions of the non-resident landlords scheme (NRLS). The NRLS requires income tax to be withheld on the rent, either by the tenant or letting agent as appropriate. However, the landlord can receive the rent without deduction of tax if they obtain permission from HMRC.
It is therefore necessary to consider:
whether the NRL will be granted permission to receive the rental income gross
the ongoing requirements from the NRL where gross status has been granted
the impact of the denial of permission to receive the income gross
The NRLS continues to apply to non-UK resident company landlords from 6 April 2020. Any income tax deducted under the NRLS can be offset against the corporation tax liability of the company in respect of that rental income.
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