A brief guide - All income generated from letting a property in the UK is subject to the UK tax laws and all landlords must comply with these laws whether they are UK residents or not.
UK Resident Landlords
UK Resident landlords are responsible for ensuring that all income from letting property in the UK is declared to Revenue & Customs and the correct tax is paid.
All estate agents are required by law to make an annual disclosure to HMRC regarding every property they rent on behalf of a UK Resident. The details supplied by the landlord must include the name and address of the landlord, address of the tenanted property and gross annual rent received for the property. This information must be supplied whether the property is managed or not.
We recommend that landlords seek the advice of an accountant regarding their tax affairs – both to ensure that they keep within the law and to ensure that they do not pay more tax than required.
Under Taxation of Land (Non-Residents) Regulations 1995, an agent who receives rent on behalf of a Non-Resident Landlord* or a tenant who pays rent directly to a Non-Resident Landlord must retain tax on the rent and pay this tax to HMRC.
*Non-Resident Landlords are defined as persons (this term includes individuals, companies and trustees) who have a UK rental income and a ‘usual place of abode (absent from the UK for 6 months or more)’ outside the UK.
As a Non-Resident Landlord, your agent or tenant is obliged to deduct basic rate tax from all rental income received or paid (net of allowable deductions) and to pay this amount to HMRC on a quarterly basis. You will be issued with an annual certificate (NRL6) confirming the payments made to HMRC and it will then be your responsibility to liaise with HMRC to ensure that the amount of tax paid on the rental income is correct and that all deductible expenses to which you may be entitled have been taken into account. Your agent is also obliged to charge you for this service.
This legislation places the responsibility for collecting and paying this tax squarely with your agent or tenant, therefore, in the absence of any further authority from HMRC this tax will be deducted.
Receiving Your Rent Gross-With No Tax Deducted
There is a provision under the regulations for Non-Resident Landlords to apply to HMRC to receive rental income gross and this is strongly recommended.
For help and advice about the NRL Scheme you can visit:
http://www.hmrc.gov.uk/international/nr-landlords.htm#11 or contact HMRC using Tel: 0300 200 3300 (from UK) or +44 300 051 6644/6651 (from abroad); Fax: 0300 054 7381
Application to join the NRL scheme can be made online by downloading one of the following forms from the website:
NRL1 - If the applicant is an individual
NRL2 - If the applicant is a corporate organisation
NRL3 - If the applicant is a trustee (including a corporate trustee)
The NRL application forms are also available from Moving City who can provide guidance on completing the forms. Where we act as your agents, our address for the forms is 18C Mansell Street London E1 8AA and our HMRC reference number is NAO52955 (for question 11). Don’t forget, if you are already registered and move to Moving City, please contact HMRC and provide them with our details so they can write to us to confirm your registration.
Completed application forms must be posted to:
CAR-Personal Tax International
Unit 406, St. John’s House, Merton Road, Liverpool L75 1BB
When approval is given, HMRC will send you a notice of approval to receive rent with no tax deducted and a separate notice will be sent to your agent or tenant, as named on the application, authorising them to pay the rent without deducting tax.
Your agent or tenant can only take instruction from the notice addressed directly to them and must withhold tax up to the date stated on that notice.
Non-Resident Landlord tax is paid quarterly on the 31st October, 31st January, 30th April and 31st July. HMRC will normally backdate the authority to pay rent without deducting tax to the beginning of the quarter in which HMRC receives the application.
It should be remembered that acceptance to the Non-Resident Landlord scheme is an approval to receive rental income gross. It is not an exemption from tax liability and you will still need to arrange to have your income assessed and tax paid to HMRC. HMRC will normally send self-assessment documentation automatically after granting approval, if, however, you do not receive this documentation, it is still your responsibility to ensure that taxation is assessed and paid.
All estate agents are required by law to make an annual disclosure to HMRC regarding every property that they rent for Non-Resident Landlords. The details must include; name and address of landlord, certificate of approval number, gross rental income received, expenses deducted, tax deducted. This information must be supplied whether the property is managed or not.
Moving City are neither accountants or tax consultants, we therefore recommend that all landlords seek further advice regarding their taxation affairs from a suitably qualified professional.