The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
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:
whether the NRL will be granted permission to receive the rental income gross
the ongoing requirements of the NRLS, and
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:
the acquisition vehicle, and
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.
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:
they have complied with their UK
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