Non-resident landlords ― individuals

Produced by Tolley
Non-resident landlords ― individuals

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Non-resident landlords ― individuals
  • Permission to receive rental income gross
  • Ongoing requirements from an NRL
  • Denial of permission to receive gross rental income
  • Acquisition vehicle
  • Non-natural persons
  • Individuals
  • Taxation of chargeable gains
  • Further reading
  • Interest planning
  • More...

A person who is not resident in the UK is not taxed on their worldwide income. Instead, a non-resident is only taxable in the UK on UK source income. See the Residence ― overview guidance note for more information.

Given that these individuals live outside the UK, without special provisions such individuals could evade the UK tax charge on their UK property income by virtue of their absence and non-declaration of this income.

Therefore, non-resident landlords (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:

  1. whether the NRL will be granted permission to receive the rental income gross

  2. the ongoing requirements of the NRLS, and

  3. the impact of the denial of permission to receive the income gross

It is also helpful to understand some of the basic planning issues relevant to NRLs including:

  1. the acquisition vehicle, and

  2. interest planning

It is worth noting that if the property is commercial property, the NRL should to consider whether it is necessary to register for VAT. For VAT purposes, the UK VAT rules apply as normal, as the property is sited in the UK even though the property owner is not UK resident. See the Overview of VAT and property issues and Overview ― registering for VAT guidance notes.

This guidance note considers the position of a non-resident individual holding property in the UK. For the position where the NRL is a company, see the Non-resident landlords guidance note.

For further reading on NRL, see Simon’s Taxes B6.217.

Permission to receive rental income gross

An NRL can apply to receive their rents gross by completing and submitting form NRL1 to HMRC.

For the application to be accepted by HMRC, the NRL must demonstrate that:

  1. they have complied with their UK

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