Non-Resident Landlord – Tax reminder for overseas landlords

Updated: April 9, 2019

What is a Non-Resident landlord?

A non-resident landlord is essentially a landlord who lives overseas for more than 6 months of the year and rents out a property in the United Kingdom and is therefore required to pay tax on any rental income.

Drawbacks of being an overseas landlord

Although it can be tempting to self manage your property from abroad, one of the major drawbacks is having to deal with void periods, changes to legislation, Section 24,  maintenance issues and chasing late rent payments. This can often be stressful and time consuming.  It’s an even bigger hassle if you happen to live in a different time zone or are in an area where there is slow internet connectivity.

The other major drawback of being a non-resident landlord is that if you do live overseas for more than six months of the year and you want to receive your rental income in full, you’ll need to declare your non-residential landlord status with HMRC.  Otherwise,  a percentage of tax will have to be withheld by either your letting agent or your tenant.

Small wooden squares in a row on a wooden surface spelling out the word taxes.

Landlords who lives overseas for more than 6 months of the year and rents out a property in the United Kingdom is essentially required to pay tax on any rental income.

HMRC’s Non-Resident landlord scheme

In short, if your weekly rent exceeds £100, HMRC expect your tenant (or letting agent) to deduct the basic rate of tax from your rent.

But with many tenants blissfully unaware of this requirement and some, no doubt, put off by the responsibility of withholding their landlord’s tax, it’s worthwhile declaring your overseas residential status with HMRC.  This will allow you to pay tax on your rental income through Self Assessment and can be done my making an application to have UK rental income without deduction of UK tax via the NRL1i form.

If your application for non-resident landlord status is approved, HMRC will tell your letting agent or tenant not to deduct tax from your rent and you’ll need to declare your income in your Self Assessment tax return.

From our own knowledge and experience of working directly with  tenants we know that, like landlords, they want as little hassle as possible – once they have found a property and passed all of the reference checks, paid a deposit and set up their monthly direct debits to pay the monthly rent repayments, the last thing they want to do is have to make contact with HMRC to sort out paying the additional tax for their landlord.

Help is at hand for overseas landlords

If you are considering moving abroad and renting out your home it is essential to get expert landlord advice.

For landlords that want a hassle-free let and guaranteed rental payments every month without fail, read more about out Rent on Time package and let us deal with all the legal paperwork on your behalf.

Other than the tax implications, there are certain aspects of letting a property that landlords should be aware of, namely:

  • Section 48 of Landlord and Tenant Act states that you must give your tenants a local contact address in the UK as an address that they can use to issue notices to you.  We are able to provide a non-resident landlord address and monitor your mail.
  • Managing rental payments – if your tenants are either consistently late with rent payments or they are over 8 weeks behind, you may be able to issue a specific legal notice to evict.  Our platinum Rent on Time package will guarantee to pay your rent every month, even if your tenant does not.
  • You must supply the tenant with a Gas Safety Certificate before they move in and it must be updated annually
  • You must supply the tenant with an emergency number so that they can contact someone for help after hours.

To request a free, no obligation discussion with one of our letting experts, simply get in touch by calling 0333 577 888 to discuss all elements of renting out your home as a non-resident landlord including tax management.

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Non-Resident Landlord - Tax reminder for overseas landlords
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Non-Resident Landlord - Tax reminder for overseas landlords
Description
Non-resident landlord? Here's an important reminder to keep abreast of the landlord tax rules if you intend to keep your UK-based property rented out.
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LettingaProperty.com
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2 Comments

  1. Sergei Selivanov June 10, 2017 at 8:27 am #

    Matthew always provides invaluable information for the landlords. In my case, I don’t know how he does it, perhaps reading my thoughts distantly, but I receive his emails and the information I look for just in time, just when I am thinking about the subject. Lettingaproperty.com is a well of useful information. Matthew, thank you very much for thinking of landlords. Quietly, on Saturdays, you send us articles which some Tax Advisers are unable to provide.

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